The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. 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 we look at how hedge funds traded Trueblue Inc (NYSE:TBI) and determine whether the smart money was really smart about this stock.
Trueblue Inc (NYSE:TBI) was in 10 hedge funds’ portfolios at the end of the first quarter of 2020. TBI investors should be aware of a decrease in hedge fund sentiment recently. There were 15 hedge funds in our database with TBI positions at the end of the previous quarter. Our calculations also showed that TBI 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the recent hedge fund action encompassing Trueblue Inc (NYSE:TBI).
How have hedgies been trading Trueblue Inc (NYSE:TBI)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TBI over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Trueblue Inc (NYSE:TBI) was held by GMT Capital, which reported holding $12.7 million worth of stock at the end of September. It was followed by AQR Capital Management with a $6.8 million position. Other investors bullish on the company included Arrowstreet Capital, D E Shaw, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position GMT Capital allocated the biggest weight to Trueblue Inc (NYSE:TBI), around 0.71% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.43 percent of its 13F equity portfolio to TBI.
Seeing as Trueblue Inc (NYSE:TBI) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds that slashed their full holdings last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $1.3 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0.7 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 5 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Trueblue Inc (NYSE:TBI) but similarly valued. These stocks are United Natural Foods, Inc. (NASDAQ:UNFI), e.l.f. Beauty, Inc. (NYSE:ELF), PGT Innovations Inc. (NASDAQ:PGTI), and Globalstar, Inc. (PINK:GSAT). This group of stocks’ market values match TBI’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $32 million in TBI’s case. e.l.f. Beauty, Inc. (NYSE:ELF) is the most popular stock in this table. On the other hand Globalstar, Inc. (PINK:GSAT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Trueblue Inc (NYSE:TBI) is even less popular than GSAT. Hedge funds dodged a bullet by taking a bearish stance towards TBI. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. Unfortunately TBI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); TBI investors were disappointed as the stock returned 19.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.