The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Gladstone Commercial Corporation (NASDAQ:GOOD).
Gladstone Commercial Corporation (NASDAQ:GOOD) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. GOOD was in 8 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with GOOD 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 Mercantile Bank Corp. (NASDAQ:MBWM), Western Asset Mortgage Capital Corp (NYSE:WMC), and Monarch Casino & Resort, Inc. (NASDAQ:MCRI) to gather more data points.
Follow Gladstone Commercial Corp (NASDAQ:GOOD)
Follow Gladstone Commercial Corp (NASDAQ:GOOD)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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What does the smart money think about Gladstone Commercial Corporation (NASDAQ:GOOD)?
Heading into the fourth quarter of 2016, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GOOD over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the number one position in Gladstone Commercial Corporation (NASDAQ:GOOD). Renaissance Technologies has a $26.4 million position in the stock. The second largest stake is held by Israel Englander’s Millennium Management, with a $3.5 million position. Other members of the smart money that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’ AQR Capital Management and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Ellington, led by Mike Vranos, established the most outsized position in Gladstone Commercial Corporation (NASDAQ:GOOD). Ellington had $0.2 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Gladstone Commercial Corporation (NASDAQ:GOOD). These stocks are Mercantile Bank Corp. (NASDAQ:MBWM), Western Asset Mortgage Capital Corp (NYSE:WMC), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), and NewLink Genetics Corp (NASDAQ:NLNK). This group of stocks’ market values match GOOD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MBWM | 6 | 23502 | 0 |
| WMC | 6 | 6129 | 2 |
| MCRI | 10 | 46957 | -4 |
| NLNK | 12 | 52368 | -1 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $34 million in GOOD’s case. NewLink Genetics Corp (NASDAQ:NLNK) is the most popular stock in this table. On the other hand Mercantile Bank Corp. (NASDAQ:MBWM) is the least popular one with only 6 bullish hedge fund positions. Gladstone Commercial Corporation (NASDAQ:GOOD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NLNK might be a better candidate to consider taking a long position in.
Disclosure: None
