Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Greif, Inc. (NYSE:GEF) from the perspective of those elite funds.
Is Greif, Inc. (NYSE:GEF) a marvelous investment now? Investors who are in the know are selling. The number of long hedge fund positions fell by 1 in recent months. Our calculations also showed that GEF isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Mario Gabelli of GAMCO Investors
Let’s analyze the latest hedge fund action surrounding Greif, Inc. (NYSE:GEF).
How are hedge funds trading Greif, Inc. (NYSE:GEF)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GEF over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Greif, Inc. (NYSE:GEF) was held by GAMCO Investors, which reported holding $47.6 million worth of stock at the end of September. It was followed by Arbiter Partners Capital Management with a $36.5 million position. Other investors bullish on the company included Marshall Wace LLP, Royce & Associates, and AQR Capital Management.
Since Greif, Inc. (NYSE:GEF) has faced falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that decided to sell off their entire stakes in the third quarter. Interestingly, Ken Grossman and Glen Schneider’s SG Capital Management dumped the largest stake of the 700 funds monitored by Insider Monkey, comprising an estimated $2.9 million in stock. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also said goodbye to its stock, about $0.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Greif, Inc. (NYSE:GEF) but similarly valued. These stocks are Antero Midstream GP LP (NYSE:AMGP), Companhia Siderurgica Nacional (NYSE:SID), Canada Goose Holdings Inc. (NYSE:GOOS), and PNM Resources, Inc. (NYSE:PNM). This group of stocks’ market caps are closest to GEF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMGP | 17 | 171786 | 6 |
| SID | 7 | 2815 | 0 |
| GOOS | 18 | 147533 | -8 |
| PNM | 19 | 264822 | 6 |
| Average | 15.25 | 146739 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $137 million in GEF’s case. PNM Resources, Inc. (NYSE:PNM) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 7 bullish hedge fund positions. Greif, Inc. (NYSE:GEF) 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 PNM might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
