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Did Hedge Funds Make The Right Call On Trimble Inc. (TRMB)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtTrimble Inc. (NASDAQ:TRMB) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Trimble Inc. (NASDAQ:TRMB) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that TRMB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

CITADEL INVESTMENT GROUP

Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to check out the latest hedge fund action surrounding Trimble Inc. (NASDAQ:TRMB).

How have hedgies been trading Trimble Inc. (NASDAQ:TRMB)?

Heading into the second quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TRMB over the last 18 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is TRMB A Good Stock To Buy?

Among these funds, Generation Investment Management held the most valuable stake in Trimble Inc. (NASDAQ:TRMB), which was worth $360.3 million at the end of the third quarter. On the second spot was Impax Asset Management which amassed $286.2 million worth of shares. Select Equity Group, D E Shaw, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to Trimble Inc. (NASDAQ:TRMB), around 3.81% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, dishing out 2.56 percent of its 13F equity portfolio to TRMB.

Because Trimble Inc. (NASDAQ:TRMB) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds that slashed their entire stakes in the first quarter. Intriguingly, Mikal Patel’s Oribel Capital Management said goodbye to the largest investment of the 750 funds followed by Insider Monkey, totaling an estimated $16.2 million in stock, and Avi Fruchter’s Anavon Capital was right behind this move, as the fund said goodbye to about $6.4 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 10 funds in the first quarter.

Let’s now review hedge fund activity in other stocks similar to Trimble Inc. (NASDAQ:TRMB). These stocks are ASE Technology Holding Co., Ltd. (NYSE:ASX), Alleghany Corporation (NYSE:Y), Pool Corporation (NASDAQ:POOL), and Camden Property Trust (NYSE:CPT). This group of stocks’ market valuations match TRMB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ASX 9 145541 -1
Y 25 268976 1
POOL 33 362202 5
CPT 32 361736 1
Average 24.75 284614 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $892 million in TRMB’s case. Pool Corporation (NASDAQ:POOL) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 9 bullish hedge fund positions. Trimble Inc. (NASDAQ:TRMB) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on TRMB as the stock returned 41.6% since the end of March and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.