The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Greif, Inc. (NYSE:GEF) based on those filings.
Greif, Inc. (NYSE:GEF) has seen a decrease in hedge fund interest of late. Our calculations also showed that GEF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the new hedge fund action regarding Greif, Inc. (NYSE:GEF).
How have hedgies been trading Greif, Inc. (NYSE:GEF)?
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in GEF a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, GAMCO Investors was the largest shareholder of Greif, Inc. (NYSE:GEF), with a stake worth $24.3 million reported as of the end of September. Trailing GAMCO Investors was Arbiter Partners Capital Management, which amassed a stake valued at $11.6 million. Arrowstreet Capital, Millennium Management, and Citadel Investment Group 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 Arbiter Partners Capital Management allocated the biggest weight to Greif, Inc. (NYSE:GEF), around 1.72% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.29 percent of its 13F equity portfolio to GEF.
Because Greif, Inc. (NYSE:GEF) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of fund managers who sold off their positions entirely heading into Q4. Interestingly, Israel Englander’s Millennium Management said goodbye to the largest stake of all the hedgies watched by Insider Monkey, comprising about $0.8 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund said goodbye to about $0.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Greif, Inc. (NYSE:GEF). We will take a look at Prestige Consumer Healthcare Inc. (NYSE:PBH), Denali Therapeutics Inc. (NASDAQ:DNLI), Cathay General Bancorp (NASDAQ:CATY), and AllianceBernstein Holding LP (NYSE:AB). This group of stocks’ market valuations are closest to GEF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PBH | 17 | 86125 | 3 |
| DNLI | 14 | 70980 | 5 |
| CATY | 15 | 21855 | 1 |
| AB | 7 | 19810 | -4 |
| Average | 13.25 | 49693 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $64 million in GEF’s case. Prestige Consumer Healthcare Inc. (NYSE:PBH) is the most popular stock in this table. On the other hand AllianceBernstein Holding LP (NYSE:AB) is the least popular one with only 7 bullish hedge fund positions. Greif, Inc. (NYSE:GEF) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately GEF wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GEF were disappointed as the stock returned 8.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
