Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards TriCo Bancshares (NASDAQ:TCBK) to find out whether there were any major changes in hedge funds’ views.
Is TCBK a good stock to buy now? TriCo Bancshares (NASDAQ:TCBK) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. TriCo Bancshares (NASDAQ:TCBK) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. There were 11 hedge funds in our database with TCBK positions at the end of the second quarter. Our calculations also showed that TCBK 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.
In the eyes of most market participants, hedge funds are seen as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, Our researchers choose to focus on the crème de la crème of this group, around 850 funds. It is estimated that this group of investors preside over the lion’s share of the hedge fund industry’s total asset base, and by observing their inimitable equity investments, Insider Monkey has discovered various investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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. Keeping this in mind let’s take a glance at the new hedge fund action surrounding TriCo Bancshares (NASDAQ:TCBK).
Do Hedge Funds Think TCBK Is A Good Stock To Buy Now?
At third quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in TCBK a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in TriCo Bancshares (NASDAQ:TCBK), which was worth $13.6 million at the end of the third quarter. On the second spot was Basswood Capital which amassed $3.4 million worth of shares. Millennium Management, AQR Capital Management, and Citadel Investment Group 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 Basswood Capital allocated the biggest weight to TriCo Bancshares (NASDAQ:TCBK), around 0.28% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to TCBK.
Since TriCo Bancshares (NASDAQ:TCBK) has faced a decline in interest from the smart money, it’s easy to see that there were a few hedgies that elected to cut their full holdings heading into Q4. It’s worth mentioning that Roger Ibbotson’s Zebra Capital Management dropped the biggest position of the 750 funds monitored by Insider Monkey, totaling close to $0.5 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund sold off about $0.3 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as TriCo Bancshares (NASDAQ:TCBK) but similarly valued. We will take a look at Tucows Inc. (NYSE:TCX), Meridian Bioscience, Inc. (NASDAQ:VIVO), Armada Hoffler Properties Inc (NYSE:AHH), Vaxart, Inc. (NASDAQ:VXRT), OneSmart International Education Group Limited (NYSE:ONE), Provention Bio, Inc. (NASDAQ:PRVB), and Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY). This group of stocks’ market valuations match TCBK’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 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $23 million in TCBK’s case. OneSmart International Education Group Limited (NYSE:ONE) is the most popular stock in this table. On the other hand Tucows Inc. (NYSE:TCX) is the least popular one with only 8 bullish hedge fund positions. TriCo Bancshares (NASDAQ:TCBK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TCBK is 37.3. 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 TCBK as the stock returned 41.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.