We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Gencor Industries, Inc. (DE) (NASDAQ:GENC).
Gencor Industries, Inc. (DE) (NASDAQ:GENC) investors should be aware of an increase in activity from the world’s largest hedge funds recently. GENC was in 4 hedge funds’ portfolios at the end of September. There were 3 hedge funds in our database with GENC holdings at the end of the previous quarter. Our calculations also showed that GENC 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s take a glance at the new hedge fund action encompassing Gencor Industries, Inc. (DE) (NASDAQ:GENC).
What have hedge funds been doing with Gencor Industries, Inc. (DE) (NASDAQ:GENC)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GENC over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in Gencor Industries, Inc. (DE) (NASDAQ:GENC). Royce & Associates has a $17.8 million position in the stock, comprising 0.2% of its 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, holding a $5.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain Mario Gabelli’s GAMCO Investors, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and . In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Gencor Industries, Inc. (DE) (NASDAQ:GENC), around 0.16% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0049 percent of its 13F equity portfolio to GENC.
As industrywide interest jumped, specific money managers have jumped into Gencor Industries, Inc. (DE) (NASDAQ:GENC) headfirst. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, established the biggest position in Gencor Industries, Inc. (DE) (NASDAQ:GENC). Springbok Capital had $0 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Gencor Industries, Inc. (DE) (NASDAQ:GENC) but similarly valued. We will take a look at Natural Gas Services Group, Inc. (NYSE:NGS), Turtle Beach Corp (NASDAQ:HEAR), American Superconductor Corporation (NASDAQ:AMSC), and Riverview Bancorp, Inc. (NASDAQ:RVSB). This group of stocks’ market values are closest to GENC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NGS | 10 | 16323 | 3 |
| HEAR | 10 | 15152 | -3 |
| AMSC | 12 | 27200 | 1 |
| RVSB | 10 | 6350 | 2 |
| Average | 10.5 | 16256 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $24 million in GENC’s case. American Superconductor Corporation (NASDAQ:AMSC) is the most popular stock in this table. On the other hand Natural Gas Services Group, Inc. (NYSE:NGS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Gencor Industries, Inc. (DE) (NASDAQ:GENC) is even less popular than NGS. 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 GENC, though not to the same extent, as the stock returned 8.1% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
