Hedge Funds Are Dumping Granite Construction Inc. (GVA)

Is Granite Construction Inc. (NYSE:GVA) a buy, sell, or hold? Hedge funds are taking a pessimistic view. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience

In the eyes of most investors, hedge funds are perceived as slow, old investment vehicles of yesteryear. While there are more than 8000 funds trading today, we at Insider Monkey choose to focus on the elite of this club, around 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total asset base, and by monitoring their highest performing investments, we have deciphered a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as key, optimistic insider trading sentiment is another way to break down the financial markets. There are a number of motivations for an upper level exec to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this method if shareholders understand what to do (learn more here).

Keeping this in mind, we’re going to take a glance at the recent action encompassing Granite Construction Inc. (NYSE:GVA).

How are hedge funds trading Granite Construction Inc. (NYSE:GVA)?

Heading into Q2, a total of 18 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, Columbus Circle Investors, managed by Donald Chiboucis, holds the most valuable position in Granite Construction Inc. (NYSE:GVA). Columbus Circle Investors has a $17.3 million position in the stock, comprising 0.1% of its 13F portfolio. On Columbus Circle Investors’s heels is Andrew Sandler of Sandler Capital Management, with a $8.7 million position; 0.3% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Chuck Royce’s Royce & Associates, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Granite Construction Inc. (NYSE:GVA) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few money managers who were dropping their positions entirely last quarter. Interestingly, Steven Cohen’s SAC Capital Advisors cut the biggest position of the 450+ funds we watch, comprising about $4.1 million in stock.. Robert Bishop’s fund, Impala Asset Management, also said goodbye to its stock, about $1.5 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Granite Construction Inc. (NYSE:GVA)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the last 180-day time period, Granite Construction Inc. (NYSE:GVA) has experienced zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Granite Construction Inc. (NYSE:GVA). These stocks are MasTec, Inc. (NYSE:MTZ), Aegion Corp – Class A (NASDAQ:AEGN), Tutor Perini Corp (NYSE:TPC), and Primoris Services Corp (NASDAQ:PRIM). This group of stocks are the members of the heavy construction industry and their market caps match GVA’s market cap.