We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Triton International Limited (NYSE:TRTN) and determine whether hedge funds skillfully traded this stock.
Triton International Limited (NYSE:TRTN) investors should pay attention to a decrease in hedge fund interest lately. Our calculations also showed that TRTN 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.
At the moment there are plenty of signals shareholders put to use to evaluate their holdings. A duo of the most innovative signals are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can beat the market by a significant amount (see the details here).
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. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding Triton International Limited (NYSE:TRTN).
What does smart money think about Triton International Limited (NYSE:TRTN)?
Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TRTN over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of Triton International Limited (NYSE:TRTN), with a stake worth $10.1 million reported as of the end of September. Trailing Arrowstreet Capital was Abrams Bison Investments, which amassed a stake valued at $4.5 million. PEAK6 Capital Management, Spindletop Capital, and PEAK6 Capital Management 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 Spindletop Capital allocated the biggest weight to Triton International Limited (NYSE:TRTN), around 3.54% of its 13F portfolio. Abrams Bison Investments is also relatively very bullish on the stock, designating 1.32 percent of its 13F equity portfolio to TRTN.
Because Triton International Limited (NYSE:TRTN) has witnessed bearish sentiment from the smart money, logic holds that there was a specific group of money managers that slashed their positions entirely heading into Q4. Interestingly, Noam Gottesman’s GLG Partners sold off the largest position of all the hedgies tracked by Insider Monkey, valued at about $7.8 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $1.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to Triton International Limited (NYSE:TRTN). These stocks are Karuna Therapeutics, Inc. (NASDAQ:KRTX), Weingarten Realty Investors (NYSE:WRI), Liberty Latin America Ltd. (NASDAQ:LILAK), and Brandywine Realty Trust (NYSE:BDN). All of these stocks’ market caps are similar to TRTN’s market cap.
|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 18 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $26 million in TRTN’s case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand Brandywine Realty Trust (NYSE:BDN) is the least popular one with only 11 bullish hedge fund positions. Triton International Limited (NYSE:TRTN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately TRTN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TRTN investors were disappointed as the stock returned 18.8% 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.