Is Great Southern Bancorp, Inc. (GSBC) Going to Burn These Hedge Funds?

The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Great Southern Bancorp, Inc. (NASDAQ:GSBC).

Great Southern Bancorp, Inc. (NASDAQ:GSBC) investors should be aware of a decrease in hedge fund interest recently. There were 7 hedge funds in our database with GSBC positions 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 Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP), Novavax, Inc. (NASDAQ:NVAX), and Investment Technology Group (NYSE:ITG) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Kevin George/Shutterstock.com

Keeping this in mind, we’re going to review the fresh action encompassing Great Southern Bancorp, Inc. (NASDAQ:GSBC).

What does the smart money think about Great Southern Bancorp, Inc. (NASDAQ:GSBC)?

Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, down 14% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards GSBC over the last 5 quarters. So, let’s find out 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, one of the biggest hedge funds in the world, has the most valuable position in Great Southern Bancorp, Inc. (NASDAQ:GSBC), worth close to $8.8 million, comprising less than 0.1% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, which oversees a $1.8 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Glenn Russell Dubin’s Highbridge Capital Management. 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.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. 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 700+ hedge funds tracked by Insider Monkey identified GSBC as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks similar to Great Southern Bancorp, Inc. (NASDAQ:GSBC). We will take a look at Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP), Novavax, Inc. (NASDAQ:NVAX), Investment Technology Group (NYSE:ITG), and American Renal Associates Holdings Inc (NYSE:ARA). This group of stocks’ market values resemble GSBC’s market value.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $11 million in GSBC’s case. Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP) is the most popular stock in this table. On the other hand American Renal Associates Holdings Inc (NYSE:ARA) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Great Southern Bancorp, Inc. (NASDAQ:GSBC) is even less popular than ARA. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none.