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How Trecora Resources (TREC) Stacks Up Against Its Peers

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was PEAK6 Capital Management).

Let’s go over hedge fund activity in other stocks similar to Trecora Resources (NYSE:TREC). These stocks are Heritage Oaks Bancorp (NASDAQ:HEOP), Orchids Paper Products Company (NYSEMKT:TIS), Carolina Financial Corp (NASDAQ:CARO), and Vince Holding Corp (NYSE:VNCE). This group of stocks’ market values resemble TREC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HEOP 4 26403 -1
TIS 2 12263 -3
CARO 2 8642 0
VNCE 13 32250 -1

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $10 million in TREC’s case. Vince Holding Corp (NYSE:VNCE) is the most popular stock in this table. On the other hand Orchids Paper Products Company (NYSEMKT:TIS) is the least popular one with only 2 bullish hedge fund positions. Trecora Resources (NYSE:TREC) 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. In this regard VNCE might be a better candidate to consider taking a long position in.

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Disclosure: None