Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Transcat, Inc. (NASDAQ:TRNS).
Is TRNS a good stock to buy now? Prominent investors were taking a bearish view. The number of bullish hedge fund positions were trimmed by 2 lately. Transcat, Inc. (NASDAQ:TRNS) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. Our calculations also showed that TRNS 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). There were 9 hedge funds in our database with TRNS positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are assumed to be unimportant, outdated financial tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, Our experts look at the masters of this club, around 850 funds. These investment experts control the lion’s share of all hedge funds’ total capital, and by keeping track of their inimitable stock picks, Insider Monkey has spotted various investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year 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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 fresh hedge fund action regarding Transcat, Inc. (NASDAQ:TRNS).
Hedge fund activity in Transcat, Inc. (NASDAQ:TRNS)
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in TRNS over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Transcat, Inc. (NASDAQ:TRNS) was held by Juniper Investment Company, which reported holding $11.8 million worth of stock at the end of September. It was followed by Royce & Associates with a $9.2 million position. Other investors bullish on the company included Cove Street Capital, Minerva Advisors, and ACK Asset Management. In terms of the portfolio weights assigned to each position Juniper Investment Company allocated the biggest weight to Transcat, Inc. (NASDAQ:TRNS), around 12.5% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, designating 5.81 percent of its 13F equity portfolio to TRNS.
Seeing as Transcat, Inc. (NASDAQ:TRNS) has faced bearish sentiment from hedge fund managers, we can see that there exists a select few hedgies who sold off their positions entirely by the end of the third quarter. Interestingly, Renaissance Technologies cut the largest position of all the hedgies monitored by Insider Monkey, worth close to $0.6 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Transcat, Inc. (NASDAQ:TRNS) but similarly valued. We will take a look at Accuray Incorporated (NASDAQ:ARAY), Home Bancorp, Inc. (NASDAQ:HBCP), National CineMedia, Inc. (NASDAQ:NCMI), Kaleyra, Inc. (NYSE:KLR), Lightinthebox Holding Co Ltd (NYSE:LITB), Ideanomics, Inc. (NASDAQ:IDEX), and Southern Missouri Bancorp, Inc. (NASDAQ:SMBC). This group of stocks’ market valuations match TRNS’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 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $49 million in TRNS’s case. Accuray Incorporated (NASDAQ:ARAY) is the most popular stock in this table. On the other hand Home Bancorp, Inc. (NASDAQ:HBCP) is the least popular one with only 2 bullish hedge fund positions. Transcat, Inc. (NASDAQ:TRNS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRNS is 44.2. 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. This is a slightly negative signal and 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately TRNS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TRNS investors were disappointed as the stock returned 7.1% since the end of September (through 12/2) 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.