Hedge Funds Have Never Been This Bullish On Third Point Reinsurance Ltd (TPRE)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Third Point Reinsurance Ltd (NYSE:TPRE) in this article.

Is Third Point Reinsurance Ltd (NYSE:TPRE) a healthy stock for your portfolio? The smart money is taking a bullish view. The number of long hedge fund bets increased by 1 lately. Our calculations also showed that tpre isn’t among the 30 most popular stocks among hedge funds. TPRE was in 19 hedge funds’ portfolios at the end of March. There were 18 hedge funds in our database with TPRE positions at the end of the previous quarter.

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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.

Jonathan Barrett Luminus Management

We’re going to take a look at the latest hedge fund action surrounding Third Point Reinsurance Ltd (NYSE:TPRE).

What have hedge funds been doing with Third Point Reinsurance Ltd (NYSE:TPRE)?

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TPRE over the last 15 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.

No of Hedge Funds with TPRE Positions

More specifically, GLG Partners was the largest shareholder of Third Point Reinsurance Ltd (NYSE:TPRE), with a stake worth $16.8 million reported as of the end of March. Trailing GLG Partners was Luminus Management, which amassed a stake valued at $12.7 million. Islet Management, AQR Capital Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers were leading the bulls’ herd. Luminus Management, managed by Jonathan Barrett and Paul Segal, established the most valuable position in Third Point Reinsurance Ltd (NYSE:TPRE). Luminus Management had $12.7 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also made a $9.8 million investment in the stock during the quarter. The following funds were also among the new TPRE investors: Peter Muller’s PDT Partners, Benjamin A. Smith’s Laurion Capital Management, and Andrew Weiss’s Weiss Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Third Point Reinsurance Ltd (NYSE:TPRE) but similarly valued. We will take a look at FB Financial Corporation (NYSE:FBK), Kadant Inc. (NYSE:KAI), GoPro Inc (NASDAQ:GPRO), and Scorpio Tankers Inc. (NYSE:STNG). This group of stocks’ market valuations are closest to TPRE’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FBK 5 100875 -3
KAI 17 93212 0
GPRO 23 183454 10
STNG 18 118474 8
Average 15.75 124004 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $76 million in TPRE’s case. GoPro Inc (NASDAQ:GPRO) is the most popular stock in this table. On the other hand FB Financial Corporation (NYSE:FBK) is the least popular one with only 5 bullish hedge fund positions. Third Point Reinsurance Ltd (NYSE:TPRE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately TPRE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TPRE were disappointed as the stock returned -1.3% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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