There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Trinseo S.A. (NYSE:TSE).
Is Trinseo S.A. (NYSE:TSE) a good investment now? The best stock pickers are getting more optimistic. The number of long hedge fund bets moved up by 3 lately. Our calculations also showed that tse isn’t among the 30 most popular stocks among hedge funds. TSE was in 19 hedge funds’ portfolios at the end of the first quarter of 2019. There were 16 hedge funds in our database with TSE positions at the end of the previous quarter.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman, GLG Partners
Let’s check out the new hedge fund action regarding Trinseo S.A. (NYSE:TSE).
How are hedge funds trading Trinseo S.A. (NYSE:TSE)?
At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TSE over the last 15 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the number one position in Trinseo S.A. (NYSE:TSE). Renaissance Technologies has a $46.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is GLG Partners, managed by Noam Gottesman, which holds a $15.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism encompass Cliff Asness’s AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Consequently, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Trinseo S.A. (NYSE:TSE). Arrowstreet Capital had $4.3 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management and Bruce Kovner’s Caxton Associates LP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Trinseo S.A. (NYSE:TSE) but similarly valued. We will take a look at CRISPR Therapeutics AG (NASDAQ:CRSP), ForeScout Technologies, Inc. (NASDAQ:FSCT), Forward Air Corporation (NASDAQ:FWRD), and HudBay Minerals Inc (NYSE:HBM). This group of stocks’ market values are closest to TSE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRSP | 14 | 173268 | 3 |
| FSCT | 23 | 265548 | 6 |
| FWRD | 15 | 102299 | 4 |
| HBM | 11 | 295270 | -2 |
| Average | 15.75 | 209096 | 2.75 |
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 $209 million. That figure was $98 million in TSE’s case. ForeScout Technologies, Inc. (NASDAQ:FSCT) is the most popular stock in this table. On the other hand HudBay Minerals Inc (NYSE:HBM) is the least popular one with only 11 bullish hedge fund positions. Trinseo S.A. (NYSE:TSE) 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 TSE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TSE were disappointed as the stock returned -16.1% 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.
