The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Great Southern Bancorp, Inc. (NASDAQ:GSBC) from the perspective of those elite funds.
Is Great Southern Bancorp, Inc. (NASDAQ:GSBC) a good investment right now? Hedge funds are taking a bearish view. The number of bullish hedge fund bets fell by 1 lately. Our calculations also showed that GSBC isn’t among the 30 most popular stocks among hedge funds. GSBC was in 8 hedge funds’ portfolios at the end of December. There were 9 hedge funds in our database with GSBC positions at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 32 percentage points since May 2014 through March 12, 2019 (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.
We’re going to take a look at the latest hedge fund action encompassing Great Southern Bancorp, Inc. (NASDAQ:GSBC).
How are hedge funds trading Great Southern Bancorp, Inc. (NASDAQ:GSBC)?
At Q4’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GSBC over the last 14 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Great Southern Bancorp, Inc. (NASDAQ:GSBC), with a stake worth $11.3 million reported as of the end of December. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $4.4 million. Millennium Management, GLG Partners, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Great Southern Bancorp, Inc. (NASDAQ:GSBC) has faced falling interest from the entirety of the hedge funds we track, we can see that there exists a select few funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest investment of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $0.5 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Great Southern Bancorp, Inc. (NASDAQ:GSBC) but similarly valued. These stocks are Yirendai Ltd. (NYSE:YRD), nLIGHT, Inc. (NASDAQ:LASR), Photronics, Inc. (NASDAQ:PLAB), and Resolute Energy Corp (NYSE:REN). This group of stocks’ market caps are closest to GSBC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YRD | 3 | 5857 | -2 |
| LASR | 4 | 27303 | -1 |
| PLAB | 16 | 70442 | 2 |
| REN | 11 | 148750 | 1 |
| Average | 8.5 | 63088 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $19 million in GSBC’s case. Photronics, Inc. (NASDAQ:PLAB) is the most popular stock in this table. On the other hand Yirendai Ltd. (NYSE:YRD) is the least popular one with only 3 bullish hedge fund positions. Great Southern Bancorp, Inc. (NASDAQ:GSBC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on GSBC as the stock returned 24.3% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
