Greif, Inc. (GEF): Insiders Aren’t Crazy About It

Greif, Inc. (NYSE:GEF) was in 9 hedge funds’ portfolio at the end of the first quarter of 2013. GEF has seen a decrease in support from the world’s most elite money managers of late. There were 14 hedge funds in our database with GEF holdings at the end of the previous quarter.

To most shareholders, hedge funds are viewed as worthless, outdated investment vehicles of years past. While there are greater than 8000 funds trading today, we look at the upper echelon of this group, about 450 funds. It is estimated that this group oversees the lion’s share of the hedge fund industry’s total capital, and by monitoring their top investments, we have uncovered a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as key, optimistic insider trading activity is a second way to break down the stock market universe. As the old adage goes: there are plenty of incentives for an executive to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this strategy if investors know where to look (learn more here).

With these “truths” under our belt, it’s important to take a look at the latest action surrounding Greif, Inc. (NYSE:GEF).

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

In preparation for this quarter, a total of 9 of the hedge funds we track were long in this stock, a change of -36% from the first quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Greif, Inc. (NYSE:GEF), worth close to $78.3 million, accounting for 0.2% of its total 13F portfolio. On Royce & Associates’s heels is Mario Gabelli of GAMCO Investors, with a $46.5 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include Joel Greenblatt’s Gotham Asset Management, Ken Griffin’s Citadel Investment Group and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Due to the fact that Greif, Inc. (NYSE:GEF) has experienced declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of money managers that elected to cut their entire stakes heading into Q2. At the top of the heap, Neil Chriss’s Hutchin Hill Capital said goodbye to the biggest investment of all the hedgies we key on, totaling an estimated $2.5 million in stock., and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund said goodbye to about $2.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds heading into Q2.

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

Insider buying is particularly usable when the primary stock in question has seen transactions within the past six months. Over the latest six-month time frame, Greif, Inc. (NYSE:GEF) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity 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 belong to the packaging & containers industry and their market caps resemble GEF’s market cap.