Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Is Green Brick Partners Inc (NASDAQ:GRBK) a buy, sell, or hold? Money managers are definitely getting more bullish. The number of long hedge fund positions that are disclosed in regulatory 13F filings rose by 2 in recent months. There were 8 hedge funds in our database with GRBK positions at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Dynavax Technologies Corporation (NASDAQ:DVAX), BioTime, Inc. (NYSEAMEX:BTX), and Teligent Inc (NASDAQ:TLGT) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with Green Brick Partners Inc (NASDAQ:GRBK)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 33% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards GRBK over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, David Einhorn’s Greenlight Capital has the largest position in Green Brick Partners Inc (NASDAQ:GRBK), worth close to $199.2 million, corresponding to 3.8% of its total 13F portfolio. The second most bullish fund manager is Third Point, led by Dan Loeb, which holds a $66.8 million position. Other hedge funds and institutional investors that are bullish consist of Terence Hogan’s Addison Clark Management, and Daniel Beltzman and Gergory Smith’s Birch Run Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, key money managers have been driving this bullishness. Ariel Investments, led by John W. Rogers, assembled the biggest position in Green Brick Partners Inc (NASDAQ:GRBK). Ariel Investments had $2.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.3 million position during the quarter.
Let’s now review hedge fund activity in other stocks similar to Green Brick Partners Inc (NASDAQ:GRBK). These stocks are Dynavax Technologies Corporation (NASDAQ:DVAX), BioTime, Inc. (NYSEAMEX:BTX), Teligent Inc (NASDAQ:TLGT), and Gold Resource Corporation (NYSEAMEX:GORO). This group of stocks’ market values resemble GRBK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DVAX | 22 | 131144 | -1 |
| BTX | 7 | 102369 | 1 |
| TLGT | 7 | 31292 | 0 |
| GORO | 6 | 17219 | -1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $281 million in GRBK’s case. Dynavax Technologies Corporation (NASDAQ:DVAX) is the most popular stock in this table. On the other hand Gold Resource Corporation (NYSEAMEX:GORO) is the least popular one with only 6 bullish hedge fund positions. Green Brick Partners Inc (NASDAQ:GRBK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DVAX might be a better candidate to consider taking a long position in.
Disclosure: None
