Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Green Dot Corporation (NYSE:GDOT) was in 16 hedge funds’ portfolios at the end of the third quarter of 2015. GDOT has seen a decrease in activity from the world’s largest hedge funds lately, as there were 24 hedge funds in our database with GDOT 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 Albany International Corp. (NYSE:AIN), PTC Therapeutics, Inc. (NASDAQ:PTCT), and Bristow Group Inc (NYSE:BRS) to gather more data points.
Follow Green Dot Corp (NYSE:GDOT)
Follow Green Dot Corp (NYSE:GDOT)
In today’s marketplace there are tons of gauges stock market investors have at their disposal to assess publicly traded companies. A pair of the most under-the-radar gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform the broader indices by a significant amount (see the details here).
Keeping this in mind, let’s take a peek at the key action surrounding Green Dot Corporation (NYSE:GDOT).
What does the smart money think about Green Dot Corporation (NYSE:GDOT)?
Heading into Q4, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Joseph A. Jolson’s Harvest Capital Strategies has the most valuable position in Green Dot Corporation (NYSE:GDOT), worth close to $37.9 million, accounting for 6.8% of its total 13F portfolio. Coming in second is Ken Griffin’s Citadel Investment Group, with a $30.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. The remaining members of the smart money that hold long positions include Peter S. Park’s Park West Asset Management, Neil Chriss’ Hutchin Hill Capital and Porter Collins, Daniel Moses, and Vincent Daniel’s Seawolf Capital.
Due to the fact that Green Dot Corporation (NYSE:GDOT) has witnessed a declination in interest from the smart money, logic holds that there is a sect of fund managers who sold off their positions entirely heading into Q4. Intriguingly, Jim Simons’ Renaissance Technologies said goodbye to the largest position of all the hedgies monitored by Insider Monkey, comprising about $4.1 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also sold off its stock, about $4.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 8 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Green Dot Corporation (NYSE:GDOT) but similarly valued. These stocks are Albany International Corp. (NYSE:AIN), PTC Therapeutics, Inc. (NASDAQ:PTCT), Bristow Group Inc (NYSE:BRS), and Rovi Corporation (NASDAQ:ROVI). All of these stocks’ market caps match GDOT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AIN | 12 | 44813 | 0 |
| PTCT | 28 | 156874 | -4 |
| BRS | 22 | 230756 | 8 |
| ROVI | 22 | 96153 | 2 |
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $129 million in GDOT’s case. PTC Therapeutics, Inc. (NASDAQ:PTCT) is the most popular stock in this table, while Albany International Corp. (NYSE:AIN) is the least popular one with only 12 bullish hedge fund positions. Green Dot Corporation (NYSE:GDOT) 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, PTCT might be a better candidate to consider for a long position.
