Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Gladstone Land Corporation (NASDAQ:LAND)? The smart money sentiment can provide an answer to this question.
Is LAND a good stock to buy? Gladstone Land Corporation (NASDAQ:LAND) investors should pay attention to a decrease in hedge fund sentiment of late. Gladstone Land Corporation (NASDAQ:LAND) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 11. Our calculations also showed that LAND isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the recent hedge fund action surrounding Gladstone Land Corporation (NASDAQ:LAND).
Do Hedge Funds Think LAND Is A Good Stock To Buy Now?
At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -45% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LAND over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Gladstone Land Corporation (NASDAQ:LAND) was held by Renaissance Technologies, which reported holding $2.6 million worth of stock at the end of December. It was followed by Two Sigma Advisors with a $1.5 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Horizon Asset Management. In terms of the portfolio weights assigned to each position Horizon Asset Management allocated the biggest weight to Gladstone Land Corporation (NASDAQ:LAND), around 0.01% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, dishing out 0.0041 percent of its 13F equity portfolio to LAND.
Judging by the fact that Gladstone Land Corporation (NASDAQ:LAND) has experienced bearish sentiment from hedge fund managers, we can see that there is a sect of funds that decided to sell off their entire stakes heading into Q2. Intriguingly, David Harding’s Winton Capital Management sold off the largest position of the 750 funds monitored by Insider Monkey, worth about $0.4 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dumped its stock, about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 5 funds heading into Q2.
Let’s check out hedge fund activity in other stocks similar to Gladstone Land Corporation (NASDAQ:LAND). These stocks are Nordic American Tankers Ltd (NYSE:NAT), Applied Therapeutics, Inc. (NASDAQ:APLT), SeaSpine Holdings Corp (NASDAQ:SPNE), Taseko Mines Limited (NYSE:TGB), Summit Therapeutics Inc. (NASDAQ:SMMT), Foghorn Therapeutics Inc. (NASDAQ:FHTX), and Atlanticus Holdings Corp (NASDAQ:ATLC). All of these stocks’ market caps resemble LAND’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NAT | 10 | 7114 | 5 |
| APLT | 8 | 94284 | -1 |
| SPNE | 13 | 46541 | 1 |
| TGB | 6 | 20874 | 0 |
| SMMT | 7 | 39664 | 2 |
| FHTX | 8 | 42387 | 0 |
| ATLC | 4 | 9627 | 2 |
| Average | 8 | 37213 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $7 million in LAND’s case. SeaSpine Holdings Corp (NASDAQ:SPNE) is the most popular stock in this table. On the other hand Atlanticus Holdings Corp (NASDAQ:ATLC) is the least popular one with only 4 bullish hedge fund positions. Gladstone Land Corporation (NASDAQ:LAND) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LAND is 27.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on LAND as the stock returned 38.1% since the end of the first quarter (through 6/25) and outperformed the market by an even larger margin.
Follow Gladstone Land Corp (NASDAQ:LAND)
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Disclosure: None. This article was originally published at Insider Monkey.
