Before we spend many hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Gibraltar Industries Inc (NASDAQ:ROCK).
Gibraltar Industries Inc (NASDAQ:ROCK) shareholders have witnessed an increase in support from the world’s most elite money managers of late. ROCK was in 12 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with ROCK holdings at the end of the previous quarter. Our calculations also showed that ROCK isn’t among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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 our short portfolio.
Let’s check out the key hedge fund action encompassing Gibraltar Industries Inc (NASDAQ:ROCK).
How have hedgies been trading Gibraltar Industries Inc (NASDAQ:ROCK)?
Heading into the fourth quarter of 2018, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in ROCK heading into this year. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Gibraltar Industries Inc (NASDAQ:ROCK) was held by Pzena Investment Management, which reported holding $49.9 million worth of stock at the end of September. It was followed by Headlands Capital with a $20.2 million position. Other investors bullish on the company included Driehaus Capital, D E Shaw, and Royce & Associates.
Now, some big names have been driving this bullishness. PEAK6 Capital Management, managed by Matthew Hulsizer, established the most valuable call position in Gibraltar Industries Inc (NASDAQ:ROCK). PEAK6 Capital Management had $1.7 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.2 million position during the quarter.
Let’s check out hedge fund activity in other stocks similar to Gibraltar Industries Inc (NASDAQ:ROCK). We will take a look at Helix Energy Solutions Group Inc. (NYSE:HLX), Herc Holdings Inc. (NYSE:HRI), Natera Inc (NASDAQ:NTRA), and Tortoise Energy Infrastructure Corporation (NYSE:TYG). All of these stocks’ market caps resemble ROCK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLX | 16 | 59869 | -1 |
| HRI | 24 | 667633 | 1 |
| NTRA | 21 | 204485 | 7 |
| TYG | 3 | 17317 | 0 |
| Average | 16 | 237326 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $237 million. That figure was $125 million in ROCK’s case. Herc Holdings Inc. (NYSE:HRI) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 3 bullish hedge fund positions. Gibraltar Industries Inc (NASDAQ:ROCK) 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. In this regard HRI might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
