It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Gevo, Inc. (NASDAQ:GEVO).
Gevo, Inc. (NASDAQ:GEVO) shareholders have witnessed an increase in support from the world’s most elite money managers lately. A brutal 47% fall in the stock during the third quarter was just what smart money needed to take up more positions, as 11 investment firms that we track were long Gevo on September 30, up by one during the quarter, while the value of their holdings ballooned by nearly 500% as smart money pounced on the wounded stock, hoarding 38.40% of its shares as of the end of September. However, shares have continued to decline, not delivering the reversal that smart money may have been expecting. At the end of this article we will also compare GEVO to other stocks including AEterna Zentaris Inc. (USA) (NASDAQ:AEZS), EnteroMedics Inc (NASDAQ:ETRM), and Biodel Inc (NASDAQ:BIOD) to get a better sense of its popularity.
Follow Gevo Inc. (NASDAQ:GEVO)
Follow Gevo Inc. (NASDAQ:GEVO)
To most investors, hedge funds are viewed as underperforming, outdated investment tools of yesteryear. While there are greater than an 8,000 funds trading at the moment, our researchers look at the masters of this group, approximately 700 funds. These investment experts administer the lion’s share of the hedge fund industry’s total asset base, and by following their best equity investments, Insider Monkey has discovered several investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s take a peek at the new action encompassing Gevo, Inc. (NASDAQ:GEVO).
What have hedge funds been doing with Gevo, Inc. (NASDAQ:GEVO)?
Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 17% rise from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Hal Mintz’s Sabby Capital has the biggest position in Gevo, Inc. (NASDAQ:GEVO), worth close to $9.8 million, amounting to 0.4% of its total 13F portfolio. Coming in second is Rob Romero’s Connective Capital Management, with a $0.3 million position; 0.6% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish include Alexander Mitchell’s Scopus Asset Management, and Anand Parekh’s Alyeska Investment Group.
As aggregate interest increased, key hedge funds have been driving this bullishness. Connective Capital Management assembled the biggest position in Gevo, Inc. (NASDAQ:GEVO). Louis Bacon’s Moore Global Investments also initiated a $0.1 million position during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Gevo, Inc. (NASDAQ:GEVO) but similarly valued. We will take a look at AEterna Zentaris Inc. (USA) (NASDAQ:AEZS), EnteroMedics Inc (NASDAQ:ETRM), Biodel Inc (NASDAQ:BIOD), and Rubicon Technology, Inc. (NASDAQ:RBCN). This group of stocks’ market caps are similar to GEVO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEZS | 4 | 1173 | 2 |
| ETRM | 5 | 809 | -1 |
| BIOD | 8 | 6239 | -1 |
| RBCN | 5 | 8457 | -2 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $11 million in GEVO’s case. Biodel Inc (NASDAQ:BIOD) is the most popular stock in this table. On the other hand AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) is the least popular one with only 4 bullish hedge fund positions. Gevo, Inc. (NASDAQ:GEVO) is not the most popular stock in this group but hedge fund interest is still above average and there is more money invested in it than in any of the other stocks. This is a positive signal and makes Gevo a good candidate to consider a long position in, especially with the stock now even cheaper.
