We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Gol Linhas Aereas Inteligentes SA (NYSE:GOL).
Gol Linhas Aereas Inteligentes SA (NYSE:GOL) was in 12 hedge funds’ portfolios at the end of the fourth quarter of 2019. GOL has seen an increase in activity from the world’s largest hedge funds in recent months. There were 11 hedge funds in our database with GOL holdings at the end of the previous quarter. Our calculations also showed that GOL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to check out the key hedge fund action encompassing Gol Linhas Aereas Inteligentes SA (NYSE:GOL).
Hedge fund activity in Gol Linhas Aereas Inteligentes SA (NYSE:GOL)
At Q4’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GOL over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Contrarian Capital held the most valuable stake in Gol Linhas Aereas Inteligentes SA (NYSE:GOL), which was worth $126.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $59.6 million worth of shares. Millennium Management, Two Sigma Advisors, and BlueCrest Capital Mgmt. 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 Contrarian Capital allocated the biggest weight to Gol Linhas Aereas Inteligentes SA (NYSE:GOL), around 15.46% of its 13F portfolio. BlueCrest Capital Mgmt. is also relatively very bullish on the stock, dishing out 0.16 percent of its 13F equity portfolio to GOL.
Consequently, key hedge funds have been driving this bullishness. Canyon Capital Advisors, managed by Joshua Friedman and Mitchell Julis, established the most outsized position in Gol Linhas Aereas Inteligentes SA (NYSE:GOL). Canyon Capital Advisors had $1.6 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners, Matthew Tewksbury’s Stevens Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Gol Linhas Aereas Inteligentes SA (NYSE:GOL) but similarly valued. These stocks are American National Insurance Company (NASDAQ:ANAT), QTS Realty Trust Inc (NYSE:QTS), Kodiak Sciences Inc (NASDAQ:KOD), and Farfetch Limited (NYSE:FTCH). This group of stocks’ market values resemble GOL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ANAT | 16 | 62011 | -1 |
| QTS | 23 | 326983 | -4 |
| KOD | 11 | 1147037 | 4 |
| FTCH | 27 | 492622 | 5 |
| Average | 19.25 | 507163 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $507 million. That figure was $219 million in GOL’s case. Farfetch Limited (NYSE:FTCH) is the most popular stock in this table. On the other hand Kodiak Sciences Inc (NASDAQ:KOD) is the least popular one with only 11 bullish hedge fund positions. Gol Linhas Aereas Inteligentes SA (NYSE:GOL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately GOL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GOL investors were disappointed as the stock returned -75.9% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
