Is Triple-S Management Corp. (NYSE:GTS) 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, 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.
Hedge fund interest in Triple-S Management Corp. (NYSE:GTS) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as REX American Resources Corp (NYSE:REX), Ichor Holdings, Ltd. (NASDAQ:ICHR), and Collegium Pharmaceutical Inc (NASDAQ:COLL) to gather more data points.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Cliff Asness of AQR Capital Management
Let’s take a gander at the key hedge fund action encompassing Triple-S Management Corp. (NYSE:GTS).
What have hedge funds been doing with Triple-S Management Corp. (NYSE:GTS)?
At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GTS over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in Triple-S Management Corp. (NYSE:GTS). Pzena Investment Management has a $30.5 million position in the stock, comprising 0.2% of its 13F portfolio. On Pzena Investment Management’s heels is AQR Capital Management, led by Cliff Asness, holding a $11.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions consist of D. E. Shaw’s D E Shaw, Jim Simons’s Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Seeing as Triple-S Management Corp. (NYSE:GTS) has experienced falling interest from the smart money, we can see that there was a specific group of money managers who were dropping their entire stakes last quarter. Intriguingly, Lawrence Hawkins’s Prosight Capital said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $1.1 million in stock. Andrew Feldstein and Stephen Siderow’s fund, Blue Mountain Capital, also cut its stock, about $0.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Triple-S Management Corp.(NYSE:GTS). These stocks are REX American Resources Corp (NYSE:REX), Ichor Holdings, Ltd. (NASDAQ:ICHR), Collegium Pharmaceutical Inc (NASDAQ:COLL), and Ciner Resources LP (NYSE:CINR). This group of stocks’ market caps match GTS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| REX | 6 | 41966 | -1 |
| ICHR | 10 | 54349 | 3 |
| COLL | 20 | 87240 | 7 |
| CINR | 1 | 6943 | -1 |
| Average | 9.25 | 47625 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $77 million in GTS’s case. Collegium Pharmaceutical Inc (NASDAQ:COLL) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 1 bullish hedge fund positions. Triple-S Management Corp. (NYSE:GTS) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately GTS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GTS were disappointed as the stock returned 2.8% 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.
