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Do Hedge Funds Love TriNet Group Inc (TNET)?

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 8.7% through October 26th. Forty percent of the S&P 500 constituents were down more than 10%. The average return of a randomly picked stock in the index is -9.5%. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 25 most popular S&P 500 stocks among hedge funds had an average loss of 8.8%. In this article, we will take a look at what hedge funds think about TriNet Group Inc (NYSE:TNET).

TriNet Group Inc (NYSE:TNET) has experienced an increase in hedge fund sentiment of late. TNET was in 21 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with TNET positions at the end of the previous quarter. Our calculations also showed that TNET isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

William Von Mueffling - Cantillon Capital Management

We’re going to take a look at the fresh hedge fund action encompassing TriNet Group Inc (NYSE:TNET).

How have hedgies been trading TriNet Group Inc (NYSE:TNET)?

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TNET over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

TNET_dec2018

Among these funds, Cantillon Capital Management held the most valuable stake in TriNet Group Inc (NYSE:TNET), which was worth $238.4 million at the end of the third quarter. On the second spot was Cantillon Capital Management which amassed $238.4 million worth of shares. Moreover, Harbor Spring Capital, Arrowstreet Capital, and Two Sigma Advisors were also bullish on TriNet Group Inc (NYSE:TNET), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Prana Capital Management, managed by Peter Seuss, assembled the largest position in TriNet Group Inc (NYSE:TNET). Prana Capital Management had $6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $2.8 million position during the quarter. The only other fund with a new position in the stock is Sander Gerber’s Hudson Bay Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as TriNet Group Inc (NYSE:TNET) but similarly valued. We will take a look at First Industrial Realty Trust, Inc. (NYSE:FR), Aaron’s, Inc. (NYSE:AAN), Ardagh Group S.A. (NYSE:ARD), and Flowers Foods, Inc. (NYSE:FLO). All of these stocks’ market caps match TNET’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FR 16 301170 4
AAN 18 242399 -3
ARD 8 80579 0
FLO 20 183753 3
Average 15.5 201975 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $587 million in TNET’s case. Flowers Foods, Inc. (NYSE:FLO) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks TriNet Group Inc (NYSE:TNET) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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