After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Greif, Inc. (NYSE:GEF).
Greif, Inc. (NYSE:GEF) was in 14 hedge funds’ portfolios at the end of September. GEF shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 21 hedge funds in our database with GEF positions at the end of the previous quarter. Our calculations also showed that GEF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a glance at the new hedge fund action encompassing Greif, Inc. (NYSE:GEF).
Hedge fund activity in Greif, Inc. (NYSE:GEF)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in GEF a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Greif, Inc. (NYSE:GEF) was held by GAMCO Investors, which reported holding $29.9 million worth of stock at the end of September. It was followed by Arbiter Partners Capital Management with a $16.2 million position. Other investors bullish on the company included Citadel Investment Group, Marshall Wace, and D E Shaw. In terms of the portfolio weights assigned to each position Arbiter Partners Capital Management allocated the biggest weight to Greif, Inc. (NYSE:GEF), around 2.94% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.25 percent of its 13F equity portfolio to GEF.
Judging by the fact that Greif, Inc. (NYSE:GEF) has experienced a decline in interest from the smart money, we can see that there was a specific group of funds that slashed their full holdings last quarter. At the top of the heap, Noam Gottesman’s GLG Partners said goodbye to the biggest position of the 750 funds tracked by Insider Monkey, comprising an estimated $1.6 million in stock. Bruce Kovner’s fund, Caxton Associates, also dumped its stock, about $0.6 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 7 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Greif, Inc. (NYSE:GEF) but similarly valued. We will take a look at CareTrust REIT, Inc. (NASDAQ:CTRE), Select Medical Holdings Corporation (NYSE:SEM), Option Care Health, Inc. (NASDAQ:BIOS), and Evertec Inc (NYSE:EVTC). This group of stocks’ market values are closest to GEF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTRE | 15 | 106967 | -5 |
| SEM | 18 | 110991 | 1 |
| BIOS | 18 | 72446 | 3 |
| EVTC | 24 | 262435 | 2 |
| Average | 18.75 | 138210 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $77 million in GEF’s case. Evertec Inc (NYSE:EVTC) is the most popular stock in this table. On the other hand CareTrust REIT, Inc. (NASDAQ:CTRE) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Greif, Inc. (NYSE:GEF) is even less popular than CTRE. Hedge funds clearly dropped the ball on GEF as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on GEF as the stock returned 13.9% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
