Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards TriCo Bancshares (NASDAQ:TCBK) changed recently.
TriCo Bancshares (NASDAQ:TCBK) investors should be aware of a decrease in support from the world’s most elite money managers in recent months. TriCo Bancshares (NASDAQ:TCBK) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 12. Our calculations also showed that TCBK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are many indicators shareholders use to analyze their holdings. Two of the most under-the-radar indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite investment managers can trounce the market by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Matthew Lindenbaum of Basswood Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s take a look at the new hedge fund action surrounding TriCo Bancshares (NASDAQ:TCBK).
Do Hedge Funds Think TCBK Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in TCBK over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of TriCo Bancshares (NASDAQ:TCBK), with a stake worth $20.6 million reported as of the end of March. Trailing Renaissance Technologies was Basswood Capital, which amassed a stake valued at $6.5 million. AQR Capital Management, Citadel Investment Group, and Two Sigma Advisors 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 Basswood Capital allocated the biggest weight to TriCo Bancshares (NASDAQ:TCBK), around 0.3% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to TCBK.
Due to the fact that TriCo Bancshares (NASDAQ:TCBK) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies who were dropping their entire stakes in the first quarter. Interestingly, David Harding’s Winton Capital Management dropped the largest position of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $0.4 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dumped about $0 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds in the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as TriCo Bancshares (NASDAQ:TCBK) but similarly valued. We will take a look at Pliant Therapeutics, Inc. (NASDAQ:PLRX), Mack Cali Realty Corp (NYSE:CLI), Marten Transport, Ltd (NASDAQ:MRTN), James River Group Holdings Ltd (NASDAQ:JRVR), First Busey Corporation (NASDAQ:BUSE), Ferro Corporation (NYSE:FOE), and Stewart Information Services Corp (NYSE:STC). This group of stocks’ market caps are similar to TCBK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLRX | 9 | 261380 | 1 |
| CLI | 8 | 47258 | -2 |
| MRTN | 18 | 64404 | 2 |
| JRVR | 14 | 92437 | 3 |
| BUSE | 13 | 38289 | -2 |
| FOE | 12 | 181832 | 0 |
| STC | 19 | 104249 | -1 |
| Average | 13.3 | 112836 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $31 million in TCBK’s case. Stewart Information Services Corp (NYSE:STC) is the most popular stock in this table. On the other hand Mack Cali Realty Corp (NYSE:CLI) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks TriCo Bancshares (NASDAQ:TCBK) is even less popular than CLI. Our overall hedge fund sentiment score for TCBK is 18. 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 dodged a bullet by taking a bearish stance towards TCBK. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately TCBK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); TCBK investors were disappointed as the stock returned -7.3% since the end of the first quarter (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Trico Bancshares (NASDAQ:TCBK)
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Disclosure: None. This article was originally published at Insider Monkey.
