The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards GTT Communications Inc (NYSE:GTT).
Is GTT a good stock to buy now? Hedge fund interest in GTT Communications Inc (NYSE:GTT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that GTT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare GTT to other stocks including Innate Pharma S.A. (NASDAQ:IPHA), Griffin Industrial Realty, Inc. (NASDAQ:GRIF), and Gilat Satellite Networks Ltd. (NASDAQ:GILT) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Thomas Claugus of GMT Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to review the recent hedge fund action regarding GTT Communications Inc (NYSE:GTT).
Do Hedge Funds Think GTT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GTT over the last 21 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.
Among these funds, Spruce House Investment Management held the most valuable stake in GTT Communications Inc (NYSE:GTT), which was worth $81.9 million at the end of the third quarter. On the second spot was GMT Capital which amassed $2.8 million worth of shares. Arrowstreet Capital, Millennium Management, and Citadel Investment Group 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 Spruce House Investment Management allocated the biggest weight to GTT Communications Inc (NYSE:GTT), around 0.44% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, earmarking 0.21 percent of its 13F equity portfolio to GTT.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was ExodusPoint Capital).
Let’s now review hedge fund activity in other stocks similar to GTT Communications Inc (NYSE:GTT). We will take a look at Innate Pharma S.A. (NASDAQ:IPHA), Griffin Industrial Realty, Inc. (NASDAQ:GRIF), Gilat Satellite Networks Ltd. (NASDAQ:GILT), Gladstone Investment Corporation (NASDAQ:GAIN), Village Farms International, Inc. (NASDAQ:VFF), NeoPhotonics Corp (NYSE:NPTN), and CooTek (Cayman) Inc. (NYSE:CTK). All of these stocks’ market caps match GTT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IPHA | 2 | 1248 | -1 |
| GRIF | 4 | 38978 | 0 |
| GILT | 7 | 29466 | -1 |
| GAIN | 3 | 1980 | -2 |
| VFF | 7 | 7152 | 5 |
| NPTN | 17 | 52209 | -6 |
| CTK | 1 | 529 | -1 |
| Average | 5.9 | 18795 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.9 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $87 million in GTT’s case. NeoPhotonics Corp (NYSE:NPTN) is the most popular stock in this table. On the other hand CooTek (Cayman) Inc. (NYSE:CTK) is the least popular one with only 1 bullish hedge fund positions. GTT Communications Inc (NYSE:GTT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GTT is 45. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately GTT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GTT were disappointed as the stock returned -10.9% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Gtt Communications Inc. (NYSE:GTT)
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Disclosure: None. This article was originally published at Insider Monkey.
