Is Trimble Navigation Limited (TRMB) A Good Stock To Buy?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October, and sixty-three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Trimble Navigation Limited (NASDAQ:TRMB) from the perspective of those elite funds.

Is Trimble Navigation Limited (NASDAQ:TRMB) a marvelous investment now? The best stock pickers are turning bullish. The number of bullish hedge fund positions increased by 7 in recent months. TRMB was in 25 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with TRMB positions at the end of the previous quarter. At the end of this article we will also compare TRMB to other stocks including Genesis Energy, L.P. (NYSE:GEL), Graphic Packaging Holding Company (NYSE:GPK), and Navient Corp (NASDAQ:NAVI) to get a better sense of its popularity.

If you’d ask most traders, hedge funds are assumed to be slow, old investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, We look at the bigwigs of this club, about 700 funds. Most estimates calculate that this group of people handle the majority of the hedge fund industry’s total capital, and by keeping track of their highest performing equity investments, Insider Monkey has revealed several investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to take a glance at the new action encompassing Trimble Navigation Limited (NASDAQ:TRMB).

Hedge fund activity in Trimble Navigation Limited (NASDAQ:TRMB)

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 39% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the biggest position in Trimble Navigation Limited (NASDAQ:TRMB), worth close to $131 million, amounting to 1.2% of its total 13F portfolio. On Select Equity Group’s heels is D E Shaw, managed by D. E. Shaw, which holds an $51.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism consist of Ian Simm’s Impax Asset Management, David Blood and Al Gore’s Generation Investment Management and Ken Griffin’s Citadel Investment Group.

Now, key hedge funds were breaking ground themselves. Generation Investment Management, managed by David Blood and Al Gore, established a position in Trimble Navigation Limited (NASDAQ:TRMB). Generation Investment Management had $14.1 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated an $6.5 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Joel Greenblatt’s Gotham Asset Management, and George Hall’s Clinton Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Trimble Navigation Limited (NASDAQ:TRMB) but similarly valued. These stocks are Genesis Energy, L.P. (NYSE:GEL), Graphic Packaging Holding Company (NYSE:GPK), Navient Corp (NASDAQ:NAVI), and Taubman Centers, Inc. (NYSE:TCO). This group of stocks’ market caps are similar to TRMB’s market cap.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $587 million. That figure was $274 million in TRMB’s case. Graphic Packaging Holding Company (NYSE:GPK) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 7 bullish hedge fund positions. Even though Trimble Navigation Limited (NASDAQ:TRMB) is not the least popular stock in this group, its number of funds holding shares is below average. This does not necessarily mean that TRMB is not a good stock to buy and a more detailed analysis might reveal that it has some potential to gain ground. However, based on our extensive studies, we consider that the best approach is to focus on analyzing stocks that hedge funds are collectively the most fond of and, in this case, GPK may be a better alternative.