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Why Traders Are Piling Into TRC Companies, Inc. (TRR)

Shares of TRC Companies, Inc. (NYSE:TRR) have surged 45% this morning after the company announced that it has entered into a definitive merger agreement with an investment fund managed by New Mountain Capital, LLC. Under the agreement, New Mountain will buy TRC Companies, Inc. (NYSE:TRR) for $17.55 in cash per share, or a 46.8% premium to yesterday’s close. The merger agreement has been unanimously approved by the board, with CEO Chris Vincze saying, ‘This transaction will deliver immediate value to our shareholders while enabling TRC to continue to pursue its long-term growth strategy. We are confident this partnership with New Mountain Capital represents the best path forward for all of TRC’s stakeholders. New Mountain’s culture and values are aligned to our own and I believe their growth-oriented investment approach, extensive industry experience and reputation for integrity differentiate them as the ideal partner for TRC’.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

According to our data, elite fund sentiment was relatively stable going from the third quarter into the fourth. Of the 742 elite funds we track, 6 funds owned $29.17 million of TRC Companies, Inc. (NYSE:TRR) and accounted for 8.80% of the float on December 31, versus 6 funds and $24.77 million respectively on September 30. Chuck Royce‘s Royce & Associates cut its holdings by 6% but still owned 2.154 million shares at the end of December.

The Bottom Line

Traders are buying TRC Companies, Inc. (NYSE:TRR) today due to a take-private agreement that will pay shareholders a nice premium to yesterday’s prices. For those of you interested, check out this article on the largest defense contractors in the world.

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