It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Gener8 Maritime Inc (NYSE:GNRT) during the quarter below.
Gener8 Maritime Inc (NYSE:GNRT) investors should be aware of a small decrease in activity from the world’s largest hedge funds recently. GNRT was in 21 hedge funds’ portfolios at the end of the third quarter of 2015. There were 22 hedge funds in our database with GNRT holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Atara Biotherapeutics Inc (NASDAQ:ATRA), Flotek Industries Inc (NYSE:FTK), and Rapid7 Inc (NASDAQ:RPD) to gather more data points.
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According to most stock holders, hedge funds are seen as slow, outdated investment tools of the past. While there are over 8000 funds trading at the moment, We look at the bigwigs of this club, around 700 funds. These money managers watch over most of the hedge fund industry’s total capital, and by paying attention to their inimitable picks, Insider Monkey has identified numerous investment strategies that have historically outperformed the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, let’s check out the recent action surrounding Gener8 Maritime Inc (NYSE:GNRT).
What have hedge funds been doing with Gener8 Maritime Inc (NYSE:GNRT)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Oaktree Capital Management, managed by Howard Marks, holds the most valuable position in Gener8 Maritime Inc (NYSE:GNRT). Oaktree Capital Management has an $142.9 million position in the stock, comprising 1.9% of its 13F portfolio. The second most bullish fund manager is Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, which holds a $85.9 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Marc Lasry’s Avenue Capital, Michael Weinstock’s Monarch Alternative Capital and Tom Wagner and Ara Cohen’s Knighthead Capital.
Judging by the fact that Gener8 Maritime Inc (NYSE:GNRT) has witnessed a slight decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers that slashed their full holdings in the third quarter. It’s worth mentioning that Michael A. Price and Amos Meron’s Empyrean Capital Partners cut the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $8.2 million in stock, and Barry Rosenstein’s JANA Partners was right behind this move, as the fund cut about $4.8 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Gener8 Maritime Inc (NYSE:GNRT) but similarly valued. We will take a look at Atara Biotherapeutics Inc (NASDAQ:ATRA), Flotek Industries Inc (NYSE:FTK), Rapid7 Inc (NASDAQ:RPD), and Globe Specialty Metals, Inc. (NASDAQ:GSM). This group of stocks’ market valuations are similar to GNRT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATRA | 11 | 293741 | 2 |
| FTK | 13 | 173981 | -1 |
| RPD | 5 | 13391 | 5 |
| GSM | 23 | 238916 | -4 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $180 million, significantly below $493 million in GNRT’s case. Globe Specialty Metals, Inc. (NASDAQ:GSM) is the most popular stock in this table. On the other hand Rapid7 Inc (NASDAQ:RPD) is the least popular one with only 5 bullish hedge fund positions. Gener8 Maritime Inc (NYSE:GNRT) 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. In this regard GSM might be a better candidate to consider a long position.
