The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Gladstone Commercial Corporation (NASDAQ:GOOD) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Gladstone Commercial Corporation (NASDAQ:GOOD) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the third quarter of 2019. At the end of this article we will also compare GOOD to other stocks including Univest Financial Corporation (NASDAQ:UVSP), CIRCOR International, Inc. (NYSE:CIR), and Ameresco Inc (NYSE:AMRC) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to analyze the latest hedge fund action regarding Gladstone Commercial Corporation (NASDAQ:GOOD).
How have hedgies been trading Gladstone Commercial Corporation (NASDAQ:GOOD)?
Heading into the fourth quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in GOOD a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies holds the biggest position in Gladstone Commercial Corporation (NASDAQ:GOOD). Renaissance Technologies has a $61 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $5.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions contain John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Gladstone Commercial Corporation (NASDAQ:GOOD), around 0.05% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to GOOD.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Gladstone Commercial Corporation (NASDAQ:GOOD) but similarly valued. These stocks are Univest Financial Corporation (NASDAQ:UVSP), CIRCOR International, Inc. (NYSE:CIR), Ameresco Inc (NYSE:AMRC), and Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM). This group of stocks’ market caps match GOOD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UVSP | 10 | 50323 | 1 |
| CIR | 13 | 132391 | 3 |
| AMRC | 6 | 33172 | 1 |
| RYTM | 8 | 200857 | -2 |
| Average | 9.25 | 104186 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $73 million in GOOD’s case. CIRCOR International, Inc. (NYSE:CIR) is the most popular stock in this table. On the other hand Ameresco Inc (NYSE:AMRC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Gladstone Commercial Corporation (NASDAQ:GOOD) is even less popular than AMRC. Hedge funds dodged a bullet by taking a bearish stance towards GOOD. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GOOD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); GOOD investors were disappointed as the stock returned -2% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
