Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published this article and predicted that US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 835 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider GCI Liberty, Inc. (NASDAQ:GLIBA) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is GCI Liberty, Inc. (NASDAQ:GLIBA) a buy right now? Hedge funds are getting more bullish. The number of bullish hedge fund positions improved by 10 recently. Our calculations also showed that GLIBA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Boykin Curry of Eagle Capital
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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Keeping this in mind we’re going to take a gander at the fresh hedge fund action regarding GCI Liberty, Inc. (NASDAQ:GLIBA).
What have hedge funds been doing with GCI Liberty, Inc. (NASDAQ:GLIBA)?
At Q4’s end, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. By comparison, 37 hedge funds held shares or bullish call options in GLIBA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, FPR Partners was the largest shareholder of GCI Liberty, Inc. (NASDAQ:GLIBA), with a stake worth $639.3 million reported as of the end of September. Trailing FPR Partners was Eagle Capital Management, which amassed a stake valued at $459.8 million. Southeastern Asset Management, Hudson Bay Capital Management, and Tiger Eye Capital 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 Tiger Eye Capital allocated the biggest weight to GCI Liberty, Inc. (NASDAQ:GLIBA), around 25.97% of its 13F portfolio. Dumont Global is also relatively very bullish on the stock, setting aside 19.76 percent of its 13F equity portfolio to GLIBA.
As one would reasonably expect, key hedge funds were breaking ground themselves. Dumont Global, managed by Chris Yetter, established the largest position in GCI Liberty, Inc. (NASDAQ:GLIBA). Dumont Global had $23 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.6 million investment in the stock during the quarter. The following funds were also among the new GLIBA investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Benjamin A. Smith’s Laurion Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s check out hedge fund activity in other stocks similar to GCI Liberty, Inc. (NASDAQ:GLIBA). These stocks are MongoDB, Inc. (NASDAQ:MDB), Charles River Laboratories International Inc. (NYSE:CRL), LPL Financial Holdings Inc (NASDAQ:LPLA), and Tapestry, Inc. (NYSE:TPR). All of these stocks’ market caps are closest to GLIBA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDB | 32 | 778851 | 1 |
| CRL | 32 | 1088526 | -1 |
| LPLA | 41 | 1380551 | 4 |
| TPR | 40 | 543774 | 14 |
| Average | 36.25 | 947926 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.25 hedge funds with bullish positions and the average amount invested in these stocks was $948 million. That figure was $2305 million in GLIBA’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand MongoDB, Inc. (NASDAQ:MDB) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks GCI Liberty, Inc. (NASDAQ:GLIBA) is more popular among hedge funds. 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 12.9% in 2020 through March 9th but still managed to beat the market by 1.9 percentage points. Hedge funds were also right about betting on GLIBA as the stock returned -11.2% so far in Q1 (through March 9th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
