Trinseo S.A. (TSE): Are Hedge Funds Right About This Stock?

Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30. What do these smart investors think about Trinseo S.A. (NYSE:TSE)?

Trinseo S.A. (NYSE:TSE) has experienced a decrease in hedge fund interest recently. TSE was in 12 hedge funds’ portfolios at the end of the third quarter of 2015. There were 14 hedge funds in our database with TSE positions at the end of the previous quarter. At the end of this article we will also compare TSE to other stocks including Northwest Bancshares, Inc. (NASDAQ:NWBI), Stamps.com Inc. (NASDAQ:STMP), and Cempra Inc (NASDAQ:CEMP) to get a better sense of its popularity.

If you’d ask most traders, hedge funds are perceived as worthless, old investment tools of the past. While there are over 8000 funds in operation today, Our researchers hone in on the moguls of this club, about 700 funds. Most estimates calculate that this group of people have their hands on most of the smart money’s total asset base, and by keeping track of their highest performing equity investments, Insider Monkey has figured out many investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, let’s take a look at the recent action surrounding Trinseo S.A. (NYSE:TSE).

How have hedgies been trading Trinseo S.A. (NYSE:TSE)?

Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Anthony Bozza’s Lakewood Capital Management has the largest position in Trinseo S.A. (NYSE:TSE), worth close to $41.5 million, amounting to 1.6% of its total 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $7.6 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Alexander Mitchell’s Scopus Asset Management, Vince Maddi and Shawn Brennan’s SIR Capital Management and Andre F. Perold’s HighVista Strategies.

Seeing as Trinseo S.A. (NYSE:TSE) has witnessed falling interest from the smart money, it’s easy to see that there is a sect of hedgies who were dropping their positions entirely by the end of the third quarter. It’s worth mentioning that Brian Taylor’s Pine River Capital Management cut the largest position of all the hedgies monitored by Insider Monkey, comprising close to $11 million in stock. Israel Englander’s fund, Millennium Management, also cut its stock, about $2.7 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Trinseo S.A. (NYSE:TSE) but similarly valued. These stocks are Northwest Bancshares, Inc. (NASDAQ:NWBI), Stamps.com Inc. (NASDAQ:STMP), Cempra Inc (NASDAQ:CEMP), and Belmond Ltd (NYSE:BEL). This group of stocks’ market values are similar to TSE’s market value.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $72 million in TSE’s case. Stamps.com Inc. (NASDAQ:STMP) is the most popular stock in this table. On the other hand Northwest Bancshares, Inc. (NASDAQ:NWBI) is the least popular one with only 8 bullish hedge fund positions. Trinseo S.A. (NYSE:TSE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard STMP might be a better candidate to consider a long position.