Is TRUP A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Trupanion Inc (NYSE:TRUP).

Is TRUP a good stock to buy now? The best stock pickers were getting less bullish. The number of bullish hedge fund positions dropped by 3 in recent months. Trupanion Inc (NYSE:TRUP) was in 12 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 15. Our calculations also showed that TRUP 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 15 hedge funds in our database with TRUP positions at the end of the second quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are many signals stock market investors employ to assess publicly traded companies. A couple of the most innovative signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the market by a significant amount (see the details here).

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

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 we’re going to analyze the fresh hedge fund action surrounding Trupanion Inc (NYSE:TRUP).

Do Hedge Funds Think TRUP Is A Good Stock To Buy Now?

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in TRUP over the last 21 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Is TRUP A Good Stock To Buy?

Among these funds, Nine Ten Partners held the most valuable stake in Trupanion Inc (NYSE:TRUP), which was worth $161.1 million at the end of the third quarter. On the second spot was Greenlea Lane Capital which amassed $32.2 million worth of shares. Royce & Associates, D E Shaw, and Markel Gayner Asset 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 Nine Ten Partners allocated the biggest weight to Trupanion Inc (NYSE:TRUP), around 33.48% of its 13F portfolio. Greenlea Lane Capital is also relatively very bullish on the stock, earmarking 12.4 percent of its 13F equity portfolio to TRUP.

Judging by the fact that Trupanion Inc (NYSE:TRUP) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of funds that slashed their positions entirely in the third quarter. Intriguingly, Matthew Hulsizer’s PEAK6 Capital Management dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $1.1 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $0.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Trupanion Inc (NYSE:TRUP). We will take a look at Mantech International Corp (NASDAQ:MANT), Blackbaud, Inc. (NASDAQ:BLKB), Valley National Bancorp (NYSE:VLY), eXp World Holdings, Inc. (NASDAQ:EXPI), American States Water Co (NYSE:AWR), Bank OZK (NASDAQ:OZK), and Synaptics Incorporated (NASDAQ:SYNA). This group of stocks’ market valuations resemble TRUP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MANT 17 20372 1
BLKB 21 75478 2
VLY 21 38853 4
EXPI 14 111222 3
AWR 21 54964 1
OZK 20 178260 3
SYNA 23 370429 -5
Average 19.6 121368 1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $266 million in TRUP’s case. Synaptics Incorporated (NASDAQ:SYNA) is the most popular stock in this table. On the other hand eXp World Holdings, Inc. (NASDAQ:EXPI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Trupanion Inc (NYSE:TRUP) is even less popular than EXPI. Our overall hedge fund sentiment score for TRUP is 26. 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. Hedge funds clearly dropped the ball on TRUP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 TRUP as the stock returned 29.7% since Q3 (through December 8th) and outperformed the market by an even larger margin.

Follow Trupanion Inc. (NYSE:TRUP)

Disclosure: None. This article was originally published at Insider Monkey.