Greif, Inc. (GEF): Are Hedge Funds Right About This Stock?

If you were to ask many of your fellow readers, hedge funds are assumed to be overrated, old investment tools of a forgotten age. Although there are more than 8,000 hedge funds trading currently, this site focuses on the upper echelon of this group, around 525 funds. It is widely held that this group has its hands on the lion’s share of the smart money’s total capital, and by tracking their best stock picks, we’ve come up with a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as crucial, optimistic insider trading sentiment is a second way to analyze the stock market universe. As the old adage goes: there are a variety of incentives for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the impressive potential of this method if “monkeys” know what to do (learn more here).

Now that that’s out of the way, we’re going to discuss the newest info for Greif, Inc. (NYSE:GEF).

How are hedge funds trading Greif, Inc. (NYSE:GEF)?

At the end of the second quarter, a total of 8 of the hedge funds we track were long in this stock, a change of -11% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully.

According to our 13F database, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Greif, Inc. (NYSE:GEF). Royce & Associates has a $76.3 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is GAMCO Investors, managed by Mario Gabelli, which held a $44.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Natixis Global Asset Management’s Harris Associates, Joel Greenblatt’s Gotham Asset Management and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Judging by the fact that Greif, Inc. (NYSE:GEF) has faced bearish sentiment from upper-tier hedge fund managers, we can see that there lies a certain “tier” of money managers that slashed their positions entirely last quarter. Interestingly, Jim Simons’s Renaissance Technologies said goodbye to the biggest position of the 450+ funds we monitor, valued at about $3.4 million in stock, and John Overdeck and David Siegel of Two Sigma Advisors was right behind this move, as the fund sold off about $1.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds last quarter.

What have insiders been doing with Greif, Inc. (NYSE:GEF)?

Insider buying is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last 180-day time frame, Greif, Inc. (NYSE:GEF) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Greif, Inc. (NYSE:GEF). These stocks are Bemis Company, Inc. (NYSE:BMS), AptarGroup, Inc. (NYSE:ATR), Sonoco Products Company (NYSE:SON), Silgan Holdings Inc. (NASDAQ:SLGN), and Graphic Packaging Holding Company (NYSE:GPK). This group of stocks are the members of the packaging & containers industry and their market caps are closest to GEF’s market cap.

Using the returns explained by Insider Monkey’s tactics, average investors must always watch hedge fund and insider trading sentiment, and Greif, Inc. (NYSE:GEF) applies perfectly to this mantra.

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