Based in Northbrook, Illinois, Trigran Investments was launched by Douglas T. Granat in 1992. The fund has approximately $394 million in assets under management as of March 2016 and invests mainly in public equity markets using fundamental analysis to identify investment opportunities. At the end of the third quarter, Trigran’s equity portfolio had a value of $382 million, of which 54% were invested in technology stocks.
Insider Monkey has developed its own formula for measuring a fund manager’s stock picking ability. We look at the return of equity investments in companies that have a market capitalization of $1 billion and more. According to our analysis, Trigran Investments’ equity portfolio generated a return of 12.33% during the third quarter from five qualifying stock picks. In this article we’ll take a closer look at the fund’s positions in DTS Inc. (NASDAQ:DTSI), KMG Chemicals, Inc. (NYSE:KMG), Tessera Technologies, Inc. (NASDAQ:TSRA), and Farmer Brothers Co. (NASDAQ:FARM).
First up is DTS Inc. (NASDAQ:DTSI), a provider of audio technology solutions. Over the course of the third quarter, Trigran’s management team decided to cash in, as the company agreed to be taken over by Tessera Technologies, Inc. (NASDAQ:TSRA). According to its latest 13F filing, the fund held 1.28 million shares worth $54.3 million at the end of September. Given the takeover agreement, DTS shares gained 60.9% during the third quarter. Heading into the third quarter of 2016, a total of seven funds tracked by Insider Monkey held long positions in this stock, unchanged over the quarter. More specifically, Trigran Investments was the largest shareholder of DTS Inc. (NASDAQ:DTSI), followed by Royce & Associates, which amassed a stake valued at $36.5 million at the end of June. Renaissance Technologies, Hawk Ridge Management, and Fisher Asset Management also held valuable positions in the company.
Next up is KMG Chemicals, Inc. (NYSE:KMG), one of Trigran Investments’ long-term investments that was added to the portfolio back in 2011. During the third quarter, the fund’s management decided to reduce its stake in the company, trimming it by less than 1%. According to its latest 13F, Trigran held 1.73 million shares worth $49.2 million at the end of the last quarter. Although KMG Chemicals’ stock was mostly flat during the third quarter, it still managed to end it on a positive note, registering a 9% advance between July and September. KMG Chemicals, Inc. (NYSE:KMG) is not a very popular stock among the hedge funds followed by Insider Monkey, with only nine of them having reported a long position as of the end of the second quarter, down by 10% from the previous quarter. As was the case with DTS Inc, Trigran Investments was the largest shareholder of KMG Chemicals, Inc. (NYSE:KMG), followed by Jim Simons’ Renaissance Technologies, which amassed a stake valued at $6.5 million heading into the third quarter. Millennium Management, Algert Coldiron Investors, and Two Sigma Advisors also held valuable positions in the company.
We’ll check out two more of the fund’s stock picks on the next page.
Tessera Technologies, Inc. (NASDAQ:TSRA) was Trigran Investments’ third-largest equity position at the end of the third quarter. The fund’s management team decided to slightly boost their investment to 1.28 million shares worth approximately $49.2 million as reported in its latest 13F filing. The last quarter was a very good one for Tessera shareholders, as the stock finally turned north and rose 26.2% by the end of September. During the second quarter, Tessera Technologies, Inc. (NASDAQ:TSRA) registered a boost in popularity among the hedge funds tracked by Insider Monkey. A total of 28 hedge funds reportedly had this stock in their equity portfolios at the end of June, up 8% from the previous quarter. The largest stake in Tessera Technologies, Inc. (NASDAQ:TSRA) was held by Renaissance Technologies, which reported holding $68.3 million worth of stock as the end of June, followed by Trigran Investments .Other investors bullish on the company included D E Shaw, Royce & Associates, and Shannon River Fund Management.
Number four on our list is Farmer Brothers Co. (NASDAQ:FARM), a distributor of coffee, tea and culinary products. During the third quarter, Trigran Investments had its stake cut by 18% to 925,906 shares worth approximately $32.9 million according to regulatory filings. This comes despite a 10.9% return the stock registered for the third quarter. Although it is not a very popular stock among the funds tracked by Insider Monkey, Farmer Brothers Co. (NASDAQ:FARM) registered a boost in popularity, as the number of funds holding the stock at the end of June rose to 11, up 10% from the first quarter of 2016. Among these funds, Trigran Investments held the most valuable stake in Farmer Brothers Co. (NASDAQ:FARM) at the end of the second quarter, followed by Royce & Associates which amassed $16.3 million worth of shares. Moreover, Renaissance Technologies, Park West Asset Management, and MFP Investors were also bullish on Farmer Brothers.