We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Great Elm Capital Group, Inc. (NASDAQ:GEC) based on that data.
Is Great Elm Capital Group, Inc. (NASDAQ:GEC) worth your attention right now? The best stock pickers are in a bearish mood. The number of long hedge fund bets were trimmed by 1 in recent months. Our calculations also showed that GEC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jeffrey Bronchick of Cove Street Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a gander at the key hedge fund action regarding Great Elm Capital Group, Inc. (NASDAQ:GEC).
What have hedge funds been doing with Great Elm Capital Group, Inc. (NASDAQ:GEC)?
At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GEC over the last 18 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Becker Drapkin Management held the most valuable stake in Great Elm Capital Group, Inc. (NASDAQ:GEC), which was worth $4.5 million at the end of the third quarter. On the second spot was Cove Street Capital which amassed $3.2 million worth of shares. Kingdon Capital, Arbiter Partners Capital Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Becker Drapkin Management allocated the biggest weight to Great Elm Capital Group, Inc. (NASDAQ:GEC), around 6.44% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, dishing out 0.65 percent of its 13F equity portfolio to GEC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified GEC as a viable investment and initiated a position in the stock.
Let’s now review hedge fund activity in other stocks similar to Great Elm Capital Group, Inc. (NASDAQ:GEC). These stocks are Dover Motorsports, Inc. (NYSE:DVD), Vince Holding Corp (NYSE:VNCE), Blink Charging Co. (NASDAQ:BLNK), and Acorda Therapeutics Inc (NASDAQ:ACOR). This group of stocks’ market caps resemble GEC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DVD | 5 | 4589 | 0 |
| VNCE | 5 | 1773 | -2 |
| BLNK | 3 | 334 | 0 |
| ACOR | 10 | 8065 | -4 |
| Average | 5.75 | 3690 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $15 million in GEC’s case. Acorda Therapeutics Inc (NASDAQ:ACOR) is the most popular stock in this table. On the other hand Blink Charging Co. (NASDAQ:BLNK) is the least popular one with only 3 bullish hedge fund positions. Great Elm Capital Group, Inc. (NASDAQ:GEC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on GEC as the stock returned 37.6% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Forest Investments Inc. (NASDAQ:GEC)
Follow Forest Investments Inc. (NASDAQ:GEC)
Disclosure: None. This article was originally published at Insider Monkey.
