Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Hedge fund interest in GasLog Ltd (NYSE:GLOG) shares was flat at the end of last quarter, with 9 investors bullish on the company. This is usually a negative indicator. 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 Atkore International Group Inc(NYSE:ATKR), Agree Realty Corporation (NYSE:ADC), and Gibraltar Industries Inc (NASDAQ:ROCK) to gather more data points.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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How are hedge funds trading GasLog Ltd (NYSE:GLOG)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in GLOG heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Levin Capital Strategies, led by John A. Levin, holds the biggest position in GasLog Ltd (NYSE:GLOG). Levin Capital Strategies has a $17.2 million position in the stock. Sitting at the No. 2 spot is Marshall Wace LLP, led by Paul Marshall and Ian Wace, which holds a $12.2 million position. Some other professional money managers that are bullish comprise Andrew Goldman’s Seven Locks Capital Management, and Jos Shaver’s Electron Capital Partners. We should note that Electron Capital Partners is 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.
Due to the fact that GasLog Ltd (NYSE:GLOG) has encountered bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few funds that elected to cut their full holdings heading into Q4. Intriguingly, Ken Griffin’s Citadel Investment Group got rid of the biggest stake of all the hedgies monitored by Insider Monkey, worth an estimated $0.6 million in call options, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund dumped about $0.2 million worth of shares.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as GasLog Ltd (NYSE:GLOG) but similarly valued. We will take a look at Atkore International Group Inc(NYSE:ATKR), Agree Realty Corporation (NYSE:ADC), Gibraltar Industries Inc (NASDAQ:ROCK), and The Buckle, Inc. (NYSE:BKE). This group of stocks’ market caps resemble GLOG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATKR | 10 | 99817 | -2 |
| ADC | 13 | 39453 | 3 |
| ROCK | 23 | 144533 | 2 |
| BKE | 15 | 114776 | 3 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $42 million in GLOG’s case. Gibraltar Industries Inc (NASDAQ:ROCK) is the most popular stock in this table. On the other hand Atkore International Group Inc(NYSE:ATKR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks GasLog Ltd (NYSE:GLOG) is even less popular than ATKR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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Disclosure: None
