Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Gannett Co., Inc. (NYSE:GCI) was in 17 hedge funds’ portfolios at the end of December. GCI shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 19 hedge funds in our database with GCI holdings at the end of the previous quarter. Our calculations also showed that GCI 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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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.
Let’s take a peek at the new hedge fund action regarding Gannett Co., Inc. (NYSE:GCI).
What does the smart money think about Gannett Co., Inc. (NYSE:GCI)?
At the end of the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GCI over the last 14 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.
Among these funds, Alden Global Capital held the most valuable stake in Gannett Co., Inc. (NYSE:GCI), which was worth $46.9 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $4.2 million worth of shares. Moreover, AQR Capital Management, D E Shaw, and Point72 Asset Management were also bullish on Gannett Co., Inc. (NYSE:GCI), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Gannett Co., Inc. (NYSE:GCI) has witnessed falling interest from the smart money, we can see that there is a sect of hedgies that slashed their positions entirely by the end of the third quarter. At the top of the heap, Jim Simons’s Renaissance Technologies dumped the biggest stake of the 700 funds tracked by Insider Monkey, totaling an estimated $0.8 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund cut about $0.3 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Gannett Co., Inc. (NYSE:GCI) but similarly valued. We will take a look at MGP Ingredients Inc (NASDAQ:MGPI), American Woodmark Corporation (NASDAQ:AMWD), Renewable Energy Group Inc (NASDAQ:REGI), and RPT Realty (NYSE:RPT). This group of stocks’ market valuations match GCI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MGPI | 8 | 23696 | -3 |
| AMWD | 11 | 44367 | -6 |
| REGI | 18 | 83644 | -3 |
| RPT | 11 | 12153 | 2 |
| Average | 12 | 40965 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $74 million in GCI’s case. Renewable Energy Group Inc (NASDAQ:REGI) is the most popular stock in this table. On the other hand MGP Ingredients Inc (NASDAQ:MGPI) is the least popular one with only 8 bullish hedge fund positions. Gannett Co., Inc. (NYSE:GCI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately GCI wasn’t nearly as popular as these 15 stock and hedge funds that were betting on GCI were disappointed as the stock returned 14.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
