Is Greenhill & Co., Inc. (GHL) A Good Stock To Buy?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Greenhill & Co., Inc. (NYSE:GHL) .

Is Greenhill & Co., Inc. (NYSE:GHL) a worthy investment now? The smart money is betting on the stock. The number of long hedge fund positions grew by 6 lately. GHL was in 16 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with GHL holdings at the end of the previous quarter. At the end of this article we will also compare GHL to other stocks including Rudolph Technologies Inc (NYSE:RTEC), National Storage Affiliates Trust (NYSE:NSA), and Otonomy Inc (NASDAQ:OTIC) to get a better sense of its popularity.

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.

TZIDO SUN/Shutterstock.com

What does the smart money think about Greenhill & Co., Inc. (NYSE:GHL)?

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 60% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in GHL 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, Jim Simons’ Renaissance Technologies holds the number one position in Greenhill & Co., Inc. (NYSE:GHL). Renaissance Technologies has a $35.9 million position in the stock. The second most bullish fund manager is Rutabaga Capital Management, led by Peter Schliemann, which holds a $19.2 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain Ken Fisher’s Fisher Asset Management, Gregg Moskowitz’s Interval Partners and Chuck Royce’s Royce & Associates. 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.

As aggregate interest increased, some big names have been driving this bullishness. Balyasny Asset Management, led by Dmitry Balyasny, initiated the biggest position in Greenhill & Co., Inc. (NYSE:GHL). Balyasny Asset Management had $3.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $2.1 million position during the quarter. The other funds with brand new GHL positions are Sharif Siddiqui’s Alpenglow Capital, Solomon Kumin’s Folger Hill Asset Management, and Mike Vranos’ Ellington.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Greenhill & Co., Inc. (NYSE:GHL) but similarly valued. These stocks are Rudolph Technologies Inc (NYSE:RTEC), National Storage Affiliates Trust (NYSE:NSA), Otonomy Inc (NASDAQ:OTIC), and Easterly Government Properties Inc (NYSE:DEA). This group of stocks’ market caps are similar to GHL’s market cap.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $106 million in GHL’s case. Rudolph Technologies Inc (NYSE:RTEC) is the most popular stock in this table. On the other hand Easterly Government Properties Inc (NYSE:DEA) is the least popular one with only 8 bullish hedge fund positions. Greenhill & Co., Inc. (NYSE:GHL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RTEC might be a better candidate to consider taking a long position in.

Disclosure: None