The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Triple-S Management Corp.(NYSE:GTS) based on those filings.
Is GTS a good stock to buy now? Triple-S Management Corp.(NYSE:GTS) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 21. GTS has experienced an increase in support from the world’s most elite money managers in recent months. There were 10 hedge funds in our database with GTS holdings at the end of June. Our calculations also showed that GTS isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 66 percentage points since March 2017 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to check out the key hedge fund action surrounding Triple-S Management Corp.(NYSE:GTS).
Do Hedge Funds Think GTS Is A Good Stock To Buy Now?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in GTS over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Pzena Investment Management was the largest shareholder of Triple-S Management Corp.(NYSE:GTS), with a stake worth $38.8 million reported as of the end of September. Trailing Pzena Investment Management was Lakewood Capital Management, which amassed a stake valued at $27.3 million. D E Shaw, Arrowstreet Capital, and AQR 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 Lakewood Capital Management allocated the biggest weight to Triple-S Management Corp.(NYSE:GTS), around 1.32% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, designating 0.24 percent of its 13F equity portfolio to GTS.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the most outsized position in Triple-S Management Corp.(NYSE:GTS). Citadel Investment Group had $0.4 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also initiated a $0 million position during the quarter.
Let’s now review hedge fund activity in other stocks similar to Triple-S Management Corp.(NYSE:GTS). These stocks are First Mid Bancshares, Inc. (NASDAQ:FMBH), American Public Education, Inc. (NASDAQ:APEI), Consolidated Communications Holdings Inc (NASDAQ:CNSL), ChannelAdvisor Corp (NYSE:ECOM), SP Plus Corp (NASDAQ:SP), Enerplus Corp (NYSE:ERF), and The Children’s Place Inc. (NASDAQ:PLCE). This group of stocks’ market valuations resemble GTS’s market valuation.
|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 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $88 million in GTS’s case. ChannelAdvisor Corp (NYSE:ECOM) is the most popular stock in this table. On the other hand First Mid Bancshares, Inc. (NASDAQ:FMBH) is the least popular one with only 3 bullish hedge fund positions. Triple-S Management Corp.(NYSE:GTS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GTS is 46.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on GTS as the stock returned 34.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.