Genco Shipping & Trading Limited (GNK): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

Is Genco Shipping & Trading Limited (NYSE:GNK) going to take off soon? Investors who are in the know are in a bullish mood. The number of bullish hedge fund positions inched up by 2 recently.

In the eyes of most investors, hedge funds are seen as underperforming, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, we choose to focus on the top tier of this group, close to 450 funds. It is estimated that this group has its hands on the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their best investments, we have figured out a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as beneficial, optimistic insider trading activity is a second way to parse down the world of equities. Just as you’d expect, there are many motivations for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this method if you understand where to look (learn more here).

Now, we’re going to take a gander at the latest action regarding Genco Shipping & Trading Limited (NYSE:GNK).

What have hedge funds been doing with Genco Shipping & Trading Limited (NYSE:GNK)?

Heading into Q2, a total of 9 of the hedge funds we track held long positions in this stock, a change of 29% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.

Of the funds we track, Highfields Capital Management, managed by Jonathon Jacobson, holds the biggest position in Genco Shipping & Trading Limited (NYSE:GNK). Highfields Capital Management has a $5.8 million position in the stock, comprising 0.1% of its 13F portfolio. On Highfields Capital Management’s heels is Richard Chilton of Chilton Investment Company, with a $5.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Howard Marks’s Oaktree Capital Management, Chuck Royce’s Royce & Associates and John Fichthorn’s Dialectic Capital Management.

As aggregate interest increased, key hedge funds were breaking ground themselves. Royce & Associates, managed by Chuck Royce, established the most outsized position in Genco Shipping & Trading Limited (NYSE:GNK). Royce & Associates had 2.3 million invested in the company at the end of the quarter. John Fichthorn’s Dialectic Capital Management also made a $0.3 million investment in the stock during the quarter. The other funds with brand new GNK positions are D. E. Shaw’s D E Shaw and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.

Insider trading activity in Genco Shipping & Trading Limited (NYSE:GNK)

Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past half-year. Over the latest six-month time period, Genco Shipping & Trading Limited (NYSE:GNK) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the results shown by the aforementioned tactics, retail investors must always pay attention to hedge fund and insider trading sentiment, and Genco Shipping & Trading Limited (NYSE:GNK) is no exception.

Click here to learn why you should track hedge funds