The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Ferroglobe PLC (NASDAQ:GSM) based on those filings.
Ferroglobe PLC (NASDAQ:GSM) has seen a decrease in activity from the world’s largest hedge funds lately. GSM was in 11 hedge funds’ portfolios at the end of March. There were 14 hedge funds in our database with GSM positions at the end of the previous quarter. Our calculations also showed that GSM isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s view the recent hedge fund action regarding Ferroglobe PLC (NASDAQ:GSM).
What have hedge funds been doing with Ferroglobe PLC (NASDAQ:GSM)?
Heading into the second quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in GSM a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Adage Capital Management held the most valuable stake in Ferroglobe PLC (NASDAQ:GSM), which was worth $29.2 million at the end of the first quarter. On the second spot was D E Shaw which amassed $4 million worth of shares. Moreover, Prescott Group Capital Management, Royce & Associates, and Millennium Management were also bullish on Ferroglobe PLC (NASDAQ:GSM), allocating a large percentage of their portfolios to this stock.
Seeing as Ferroglobe PLC (NASDAQ:GSM) has witnessed bearish sentiment from the smart money, logic holds that there lies a certain “tier” of hedge funds who sold off their entire stakes by the end of the third quarter. It’s worth mentioning that Peter S. Park’s Park West Asset Management cut the biggest investment of all the hedgies tracked by Insider Monkey, valued at about $2.6 million in stock. Jerome L. Simon’s fund, Lonestar Capital Management, also dropped its stock, about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Ferroglobe PLC (NASDAQ:GSM). These stocks are Southern National Banc. of Virginia, Inc (NASDAQ:SONA), Abeona Therapeutics Inc (NASDAQ:ABEO), Miller Industries, Inc. (NYSE:MLR), and Franklin Covey Co. (NYSE:FC). This group of stocks’ market values are closest to GSM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SONA | 8 | 19342 | 0 |
| ABEO | 15 | 69075 | 0 |
| MLR | 8 | 51292 | 0 |
| FC | 7 | 18239 | -1 |
| Average | 9.5 | 39487 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $43 million in GSM’s case. Abeona Therapeutics Inc (NASDAQ:ABEO) is the most popular stock in this table. On the other hand Franklin Covey Co. (NYSE:FC) is the least popular one with only 7 bullish hedge fund positions. Ferroglobe PLC (NASDAQ:GSM) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately GSM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GSM were disappointed as the stock returned -22% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
