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 TransUnion (NYSE:TRU) to find out whether there were any major changes in hedge funds’ views.
Is TRU stock a buy or sell? Money managers were becoming less confident. The number of bullish hedge fund positions were cut by 6 lately. TransUnion (NYSE:TRU) was in 41 hedge funds’ portfolios at the end of December. The all time high for this statistic is 47. Our calculations also showed that TRU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 47 hedge funds in our database with TRU holdings at the end of September.
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Do Hedge Funds Think TRU Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TRU over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the biggest position in TransUnion (NYSE:TRU), worth close to $355.6 million, amounting to 1.5% of its total 13F portfolio. Coming in second is BlueSpruce Investments, led by Tim Hurd and Ed Magnus, holding a $267.5 million position; 5.3% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish consist of Paul Marshall and Ian Wace’s Marshall Wace LLP, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management and Farallon Capital. In terms of the portfolio weights assigned to each position Lansing Management allocated the biggest weight to TransUnion (NYSE:TRU), around 15.66% of its 13F portfolio. BlueSpruce Investments is also relatively very bullish on the stock, setting aside 5.27 percent of its 13F equity portfolio to TRU.
Since TransUnion (NYSE:TRU) has experienced falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers who sold off their positions entirely by the end of the fourth quarter. Interestingly, Renaissance Technologies dumped the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $25.2 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also said goodbye to its stock, about $23.6 million worth. These transactions are important to note, as total hedge fund interest dropped by 6 funds by the end of the fourth quarter.
Let’s now take a look at hedge fund activity in other stocks similar to TransUnion (NYSE:TRU). We will take a look at CDW Corporation (NASDAQ:CDW), ZoomInfo Technologies Inc. (NASDAQ:ZI), Wheaton Precious Metals Corp. (NYSE:WPM), Expedia Group Inc (NASDAQ:EXPE), Pioneer Natural Resources Company (NYSE:PXD), Hologic, Inc. (NASDAQ:HOLX), and PagSeguro Digital Ltd. (NYSE:PAGS). This group of stocks’ market valuations resemble TRU’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 41.7 hedge funds with bullish positions and the average amount invested in these stocks was $1792 million. That figure was $2025 million in TRU’s case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand PagSeguro Digital Ltd. (NYSE:PAGS) is the least popular one with only 25 bullish hedge fund positions. TransUnion (NYSE:TRU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRU is 40.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately TRU wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); TRU investors were disappointed as the stock returned -11.7% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.