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Hedge Funds Cashing Out Of TriNet Group Inc (TNET)

In this article we will take a look at whether hedge funds think TriNet Group Inc (NYSE:TNET) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

TriNet Group Inc (NYSE:TNET) was in 19 hedge funds’ portfolios at the end of March. TNET has experienced a decrease in activity from the world’s largest hedge funds of late. There were 20 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 (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.

In the eyes of most shareholders, hedge funds are seen as slow, outdated financial tools of years past. While there are over 8000 funds with their doors open today, We choose to focus on the leaders of this club, about 850 funds. These money managers control the lion’s share of all hedge funds’ total capital, and by shadowing their unrivaled investments, Insider Monkey has deciphered a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

William Von Mueffling - Cantillon Capital Management

William Von Mueffling of Cantillon Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the new hedge fund action encompassing TriNet Group Inc (NYSE:TNET).

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

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in TNET a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Cantillon Capital Management, managed by William von Mueffling, holds the most valuable position in TriNet Group Inc (NYSE:TNET). Cantillon Capital Management has a $151.7 million position in the stock, comprising 1.7% of its 13F portfolio. The second largest stake is held by Harbor Spring Capital, managed by Amit Nitin Doshi, which holds a $38.6 million position; the fund has 4.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Harbor Spring Capital allocated the biggest weight to TriNet Group Inc (NYSE:TNET), around 4.69% of its 13F portfolio. Stadium Capital Management is also relatively very bullish on the stock, earmarking 1.81 percent of its 13F equity portfolio to TNET.

Because TriNet Group Inc (NYSE:TNET) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few money managers who were dropping their full holdings by the end of the first quarter. At the top of the heap, Parag Vora’s HG Vora Capital Management dropped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, valued at an estimated $42.5 million in stock. Noam Gottesman’s fund, GLG Partners, also dumped its stock, about $11 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as TriNet Group Inc (NYSE:TNET) but similarly valued. These stocks are II-VI, Inc. (NASDAQ:IIVI), Cushman & Wakefield plc (NYSE:CWK), Coherent, Inc. (NASDAQ:COHR), and Viavi Solutions Inc (NASDAQ:VIAV). This group of stocks’ market values match TNET’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IIVI 20 99773 2
CWK 15 89918 -3
COHR 23 172545 -5
VIAV 31 305459 -6
Average 22.25 166924 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $230 million in TNET’s case. Viavi Solutions Inc (NASDAQ:VIAV) is the most popular stock in this table. On the other hand Cushman & Wakefield plc (NYSE:CWK) is the least popular one with only 15 bullish hedge fund positions. TriNet Group Inc (NYSE:TNET) 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on TNET as the stock returned 55.3% during the second quarter and outperformed the market by an even larger margin.

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