Should you buy Tremont Mortgage Trust (TRMT) stock?



In this article, we look at the evolution of hedge fund sentiment around the Tremont Mortgage Trust (NASDAQ:TRMT) and determine if it is a good investment right now. We at Insider Monkey would like to know what billionaires and hedge funds think of the company before spending days researching it. Given their 2 and 20 payment structures, hedge funds have more incentive and resources than the average investor. Foundations have access to expert networks and advice from industry insiders. They also employ numerous Ivy League and MBA alumni. Like everyone else, hedge funds perform poorly at times, but their consensus choice has historically outperformed the market after adjusting for risk.

Should you buy TRMT stock? Tremont Mortgage Trust (NASDAQ:TRMT) investors should be aware of the recent rise in enthusiasm for smart money. Tremont Mortgage Trust (NASDAQ:TRMT) was in 3 hedge fund portfolios at the end of Q1 2021. The all-time high for this statistic is 3. This means that the optimistic number of hedge fund positions for this stock is currently at an all-time high. At the end of December, there were 2 hedge funds with TRMT assets in our database. Our calculations also showed that TRMT is not included in the 30 most popular stocks among hedge funds (click to see first quarter rankings).

In the financial world, investors have a large number of tools at their disposal to evaluate stocks. A couple of the most stealthy tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the selection of the best fund managers can significantly outperform broader indices. Insider Monkey’s monthly stock picks have brought in 206.8% since March 2017 and outperformed the S&P 500 index funds by more than 115 percentage points (details here). This is why we believe hedge fund sentiment is a useful indicator that investors should look out for.

Teleconference Transcript Xiniya, XNY, Q3 2014

Teleconference Transcript Xiniya, XNY, Q3 2014

New York Stock Exchange

At Insider Monkey, we research multiple sources to find our next great investment idea. For example, a hedge fund activist wants to buy this is a biotech stock for $ 28 for 50 dollars… So, we have recommended a long position to our monthly premium mailing subscribers. We’re looking at lists like 10 best battery stocks choose the next Tesla that will bring in 10x the profit. Although we only recommend positions in a small subset of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to stock presentations at hedge fund conferences. You can subscribe to our free daily newsletter at our home page… We are now going to analyze the recent hedge fund actions in relation to the Tremont Mortgage Trust (NASDAQ:TRMT).

Do hedge funds think TRMT is a good stock to buy now?

At the end of the first quarter, a total of 3 hedge funds tracked by Insider Monkey were long in the stock, up 50% from the previous quarter. The chart below shows the number of hedge funds bullish in TRMT for the last 23 quarters. With the transition of hedge funds from hand to hand, there is a select group of key hedge fund managers who have significantly increased their assets (or have already accumulated large positions).

In particular, Renaissance Technology was the largest shareholder of the Tremont Mortgage Trust (NASDAQ: TRMT) with a $ 1 million stake reported at the end of March. Next to Renaissance Technologies was Millennium Management, which amassed a $ 0.2 million stake. Citadel Investment Group also fell in love with stocks, becoming one of the largest holders of the company’s hedge funds. In terms of portfolio weight assigned to each position, Renaissance Technologies gave the most weight to the Tremont Mortgage Trust (NASDAQ: TRMT), around 0.0013% of its 13F portfolio. Millennium Management is also relatively bullish on the stock, giving up 0.0001% of its 13F portfolio to TRMT.

As aggregate interest grew, key money managers headed the herd of bulls. Millennium Management, run by Israel Englander, has taken the most valuable position in the Tremont Mortgage Trust (NASDAQ: TRMT). At the end of the quarter, Millennium Management has invested $ 0.2 million in the company. Ken Griffin Citadel Investment Group also invested $ 0.1 million in shares during the quarter.

Let’s take a look at the performance of hedge funds in other stocks – not necessarily in the same industry as the Tremont Mortgage Trust (NASDAQ: TRMT), but priced in a similar way. We will look at Broadway Financial Corporation (NASDAQ:BYFC), Comstock Holding Companies, Inc. (NASDAQ:CHCI), China Jo Jo Drugstores Inc (NASDAQ:CJJD), Air Industries Group (NYSE:AIRI), Elmira Savings Bank (NASDAQ:ESBK), Pintec Technology Holdings Limited (NASDAQ:PT) and Forward Pharma A / S (NASDAQ:FWP). The market capitalization of this group of stocks resembles the market capitalization of TRMT.

[table] Ticker, number of HF positions with positions, total value of HF positions (x1000), change in HF position BYFC, 3.1142, -1 CHCI, 2.2312, -1 CJJD, 6.7692.1 AIRI, 1.69 , -1 ESBK, 1.166.0 PT, 2.141, -1 FWP, 3.4963.1 Average, 2.6.2355, -0.3 [/table]

View table here if you have any formatting problems.

As you can see, there were an average of 2.6 hedge funds with bullish positions in these stocks, and the average amount invested in these stocks was $ 2 million. In the case of TRMT, that figure was $ 1 million. China Jo Jo Drugstores Inc (NASDAQ:CJJD) is the most popular stock in this table. On the other hand, Air Industries Group (NYSE:AIRI) is the least popular with just 1 bullish hedge fund position. Tremont Mortgage Trust (NASDAQ: TRMT) is not the most popular stock in this group, but hedge fund interest is still above average. Our overall estimate of hedge fund sentiment for TRMT is 56. Stocks with more hedge fund positions relative to other stocks, as well as relative to their historical range, receive a higher sentiment score. This is a bit of a positive signal, but we’d rather spend the time studying the stocks that hedge funds are accumulating in. Our calculations showed that top 5 most popular stocks among hedge funds, the return was 95.8% in 2019 and 2020 and surpassed the S&P 500 ETF (SPY) by 40 percentage points. These stocks rose 17.2% in 2021 to June 11 and again outperformed the market by 3.3 percentage points. Unfortunately TRMT was not that popular as these 5 stocks and hedge funds that bet on TRMT were disappointed as their stocks are back 5.9% since the end of March (until 6/11) and outperformed. If you are interested in investing in large-cap stocks with huge upside potential, you should read top 5 most popular stocks among hedge funds, as many of these stocks have already outperformed the market since 2019.

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Disclosure: None. This article originally appeared on Insider monkey

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