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Do Hedge Funds and Insiders Love TransCanada Corporation (USA) (TRP)?

TransCanada Corporation (USA) (NYSE:TRP) was in 12 hedge funds’ portfolio at the end of the first quarter of 2013. TRP shareholders have witnessed an increase in hedge fund sentiment of late. There were 5 hedge funds in our database with TRP positions at the end of the previous quarter.

To the average investor, there are a multitude of methods market participants can use to monitor publicly traded companies. A couple of the most useful are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best investment managers can outpace the broader indices by a very impressive margin (see just how much).

Just as important, optimistic insider trading activity is a second way to break down the world of equities. Just as you’d expect, there are plenty of reasons for an executive to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this tactic if you understand what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the recent action encompassing TransCanada Corporation (USA) (NYSE:TRP).

What does the smart money think about TransCanada Corporation (USA) (NYSE:TRP)?

At the end of the first quarter, a total of 12 of the hedge funds we track held long positions in this stock, a change of 140% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings significantly.

TransCanada CorporationOf the funds we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in TransCanada Corporation (USA) (NYSE:TRP). Renaissance Technologies has a $28.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by 3G Capital, managed by Jorge Paulo Lemann, which held a $24.3 million call position; 2.3% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include Matthew Hulsizer’s PEAK6 Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and Ray Dalio’s Bridgewater Associates.

As industrywide interest jumped, some big names were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, initiated the largest position in TransCanada Corporation (USA) (NYSE:TRP). Renaissance Technologies had 28.9 million invested in the company at the end of the quarter. Jorge Paulo Lemann’s 3G Capital also initiated a $24.3 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Israel Englander’s Millennium Management, and D. E. Shaw’s D E Shaw.

How have insiders been trading TransCanada Corporation (USA) (NYSE:TRP)?

Insider purchases made by high-level executives is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the latest 180-day time frame, TransCanada Corporation (USA) (NYSE:TRP) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to TransCanada Corporation (USA) (NYSE:TRP). These stocks are Western Gas Equity Partners LP (NYSE:WGP), ONEOK, Inc. (NYSE:OKE), EQT Corporation (NYSE:EQT), Sempra Energy (NYSE:SRE), and National Grid plc (ADR) (NYSE:NGG). This group of stocks belong to the gas utilities industry and their market caps are similar to TRP’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Western Gas Equity Partners LP (NYSE:WGP) 2 9 0
ONEOK, Inc. (NYSE:OKE) 16 0 0
EQT Corporation (NYSE:EQT) 35 3 3
Sempra Energy (NYSE:SRE) 15 0 8
National Grid plc (ADR) (NYSE:NGG) 7 0 0

With the results exhibited by Insider Monkey’s research, everyday investors should always pay attention to hedge fund and insider trading activity, and TransCanada Corporation (USA) (NYSE:TRP) applies perfectly to this mantra.

Click here to learn why you should track hedge funds

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