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Should You Buy Tristate Capital Holdings Inc (TSC)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Tristate Capital Holdings Inc (NASDAQ:TSC) in this article.

Tristate Capital Holdings Inc (NASDAQ:TSC) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that tsc isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Thomas Brown Tom Brown

Let’s take a look at the new hedge fund action encompassing Tristate Capital Holdings Inc (NASDAQ:TSC).

What does the smart money think about Tristate Capital Holdings Inc (NASDAQ:TSC)?

Heading into the fourth quarter of 2018, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TSC over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

No of Hedge Funds with TSC Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Second Curve Capital, managed by Tom Brown, holds the largest position in Tristate Capital Holdings Inc (NASDAQ:TSC). Second Curve Capital has a $28.6 million position in the stock, comprising 12.5% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which holds a $21.3 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish encompass Jim Simons’s Renaissance Technologies, Richard S. Meisenberg’s ACK Asset Management and Richard Driehaus’s Driehaus Capital.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Element Capital Management, managed by Jeffrey Talpins, assembled the most outsized position in Tristate Capital Holdings Inc (NASDAQ:TSC). Element Capital Management had $0.2 million invested in the company at the end of the quarter. Robert B. Gillam’s McKinley Capital Management also initiated a $0.1 million position during the quarter.

Let’s now review hedge fund activity in other stocks similar to Tristate Capital Holdings Inc (NASDAQ:TSC). We will take a look at Boot Barn Holdings Inc (NYSE:BOOT), Middlesex Water Company (NASDAQ:MSEX), NuCana plc (NASDAQ:NCNA), and Century Communities, Inc (NYSE:CCS). This group of stocks’ market caps resemble TSC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BOOT 22 157685 3
MSEX 9 46764 1
NCNA 4 25185 -1
CCS 22 216936 1
Average 14.25 111643 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $107 million in TSC’s case. Boot Barn Holdings Inc (NYSE:BOOT) is the most popular stock in this table. On the other hand NuCana plc (NASDAQ:NCNA) is the least popular one with only 4 bullish hedge fund positions. Tristate Capital Holdings Inc (NASDAQ:TSC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BOOT might be a better candidate to consider a long position.

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

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