You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Global Net Lease, Inc. (NYSE:GNL) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. Our calculations also showed that GNL isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to go over the latest hedge fund action regarding Global Net Lease, Inc. (NYSE:GNL).
How are hedge funds trading Global Net Lease, Inc. (NYSE:GNL)?
At the end of the second quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in GNL a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Global Net Lease, Inc. (NYSE:GNL), worth close to $27.9 million, accounting for less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Dmitry Balyasny of Balyasny Asset Management, with a $8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism consist of Ken Griffin’s Citadel Investment Group, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Due to the fact that Global Net Lease, Inc. (NYSE:GNL) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few hedge funds who sold off their positions entirely in the second quarter. At the top of the heap, Noam Gottesman’s GLG Partners sold off the largest position of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $12.3 million in stock. Mike Vranos’s fund, Ellington, also said goodbye to its stock, about $0.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds in the second quarter.
Let’s also examine hedge fund activity in other stocks similar to Global Net Lease, Inc. (NYSE:GNL). These stocks are Enanta Pharmaceuticals Inc (NASDAQ:ENTA), Calavo Growers, Inc. (NASDAQ:CVGW), Gray Television, Inc. (NYSE:GTN), and SPX FLOW, Inc. (NYSE:FLOW). This group of stocks’ market valuations are similar to GNL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENTA | 20 | 229372 | 0 |
| CVGW | 15 | 46470 | 3 |
| GTN | 25 | 218715 | -2 |
| FLOW | 16 | 180904 | -4 |
| Average | 19 | 168865 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $169 million. That figure was $46 million in GNL’s case. Gray Television, Inc. (NYSE:GTN) is the most popular stock in this table. On the other hand Calavo Growers, Inc. (NASDAQ:CVGW) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Global Net Lease, Inc. (NYSE:GNL) is even less popular than CVGW. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on GNL, though not to the same extent, as the stock returned 2.1% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
