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Were Hedge Funds Right About Triumph Group Inc (TGI)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Triumph Group Inc (NYSE:TGI).

Is Triumph Group Inc (NYSE:TGI) ready to rally soon? Money managers were in an optimistic mood. The number of long hedge fund bets improved by 1 during the fourth quarter. Our calculations also showed that TGI isn’t among the 30 most popular stocks among hedge funds. TGI was in 8 hedge funds’ portfolios at the end of December. There were 7 hedge funds in our database with TGI holdings at the end of the previous quarter.

Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

Let’s take a gander at the recent hedge fund action surrounding Triumph Group Inc (NYSE:TGI).

What does the smart money think about Triumph Group Inc (NYSE:TGI)?

At the end of the fourth quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the third quarter of 2018. On the other hand, there were a total of 8 hedge funds with a bullish position in TGI a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Royce & Associates held the most valuable stake in Triumph Group Inc (NYSE:TGI), which was worth $10.1 million at the end of the third quarter. On the second spot was Atlantic Investment Management which amassed $2.1 million worth of shares. Moreover, D E Shaw, Citadel Investment Group, and Balyasny Asset Management were also bullish on Triumph Group Inc (NYSE:TGI), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, some big names were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, established the largest position in Triumph Group Inc (NYSE:TGI). Citadel Investment Group had $0.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.6 million position during the quarter. The following funds were also among the new TGI investors: John Overdeck and David Siegel’s Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Triumph Group Inc (NYSE:TGI) but similarly valued. We will take a look at Blue Hills Bancorp Inc (NYSE:BHBK), HomeStreet Inc (NASDAQ:HMST), Merchants Bancorp (NASDAQ:MBIN), and First Foundation Inc (NASDAQ:FFWM). This group of stocks’ market caps resemble TGI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BHBK 7 19541 -2
HMST 7 6175 1
MBIN 4 5638 -4
FFWM 11 80768 -2
Average 7.25 28031 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $16 million in TGI’s case. First Foundation Inc (NASDAQ:FFWM) is the most popular stock in this table. On the other hand Merchants Bancorp (NASDAQ:MBIN) is the least popular one with only 4 bullish hedge fund positions. Triumph Group Inc (NYSE:TGI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on TGI as the stock returned 109.1% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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