At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Genesee & Wyoming Inc (NYSE:GWR) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that GWR isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Noam Gottesman, GLG Partners
Let’s check out the fresh hedge fund action surrounding Genesee & Wyoming Inc (NYSE:GWR).
How have hedgies been trading Genesee & Wyoming Inc (NYSE:GWR)?
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GWR over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Blue Harbour Group held the most valuable stake in Genesee & Wyoming Inc (NYSE:GWR), which was worth $154.8 million at the end of the first quarter. On the second spot was Cardinal Capital which amassed $88 million worth of shares. Moreover, Goodnow Investment Group, Scopus Asset Management, and Winton Capital Management were also bullish on Genesee & Wyoming Inc (NYSE:GWR), allocating a large percentage of their portfolios to this stock.
Consequently, some big names have jumped into Genesee & Wyoming Inc (NYSE:GWR) headfirst. Scopus Asset Management, managed by Alexander Mitchell, assembled the biggest position in Genesee & Wyoming Inc (NYSE:GWR). Scopus Asset Management had $40.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $10.2 million investment in the stock during the quarter. The other funds with brand new GWR positions are Clint Carlson’s Carlson Capital, Sara Nainzadeh’s Centenus Global Management, and Noam Gottesman’s GLG Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Genesee & Wyoming Inc (NYSE:GWR) but similarly valued. These stocks are Kemper Corporation (NYSE:KMPR), Stericycle Inc (NASDAQ:SRCL), Zynga Inc (NASDAQ:ZNGA), and Anaplan, Inc. (NYSE:PLAN). This group of stocks’ market caps are closest to GWR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KMPR | 8 | 83442 | -7 |
| SRCL | 22 | 560523 | 3 |
| ZNGA | 35 | 799497 | 6 |
| PLAN | 22 | 625121 | 1 |
| Average | 21.75 | 517146 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $409 million in GWR’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 8 bullish hedge fund positions. Genesee & Wyoming Inc (NYSE:GWR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on GWR as the stock returned 9.2% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
