Were Hedge Funds Right About Buying Trinseo S.A. (TSE)?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Trinseo S.A. (NYSE:TSE), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Trinseo S.A. (NYSE:TSE) was in 23 hedge funds’ portfolios at the end of June. TSE has seen an increase in activity from the world’s largest hedge funds of late. There were 19 hedge funds in our database with TSE holdings at the end of the previous quarter. Our calculations also showed that TSE isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are a multitude of tools stock traders can use to grade publicly traded companies. Some of the most useful tools are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the top investment managers can trounce the S&P 500 by a very impressive amount (see the details here).

Noam Gottesman GLG Partners

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the key hedge fund action regarding Trinseo S.A. (NYSE:TSE).

What have hedge funds been doing with Trinseo S.A. (NYSE:TSE)?

At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TSE over the last 16 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with TSE Positions

The largest stake in Trinseo S.A. (NYSE:TSE) was held by Renaissance Technologies, which reported holding $42.9 million worth of stock at the end of March. It was followed by GLG Partners with a $20.7 million position. Other investors bullish on the company included Citadel Investment Group, Two Sigma Advisors, and Shellback Capital.

As industrywide interest jumped, specific money managers were breaking ground themselves. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, initiated the largest position in Trinseo S.A. (NYSE:TSE). Shellback Capital had $4.7 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $4.2 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Benjamin A. Smith’s Laurion Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.

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. We will take a look at Freshpet Inc (NASDAQ:FRPT), CSG Systems International, Inc. (NASDAQ:CSGS), CorVel Corporation (NASDAQ:CRVL), and Apellis Pharmaceuticals, Inc. (NASDAQ:APLS). This group of stocks’ market values are similar to TSE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FRPT 24 156672 -1
CSGS 18 215216 1
CRVL 15 174349 -1
APLS 17 341186 -2
Average 18.5 221856 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $116 million in TSE’s case. Freshpet Inc (NASDAQ:FRPT) is the most popular stock in this table. On the other hand CorVel Corporation (NASDAQ:CRVL) is the least popular one with only 15 bullish hedge fund positions. Trinseo S.A. (NYSE:TSE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on TSE, though not to the same extent, as the stock returned 2.5% during the third quarter and outperformed the market as well.

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