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 successful funds in these small-cap stocks. In the following paragraphs, we analyze Guaranty Bancorp (NASDAQ:GBNK) from the perspective of those successful funds.
Guaranty Bancorp (NASDAQ:GBNK) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of September. At the end of this article we will also compare GBNK to other stocks including Ascendis Pharma A/S (NASDAQ:ASND), Overstock.com, Inc. (NASDAQ:OSTK), and Myers Industries, Inc. (NYSE:MYE) 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.
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Keeping this in mind, we’re going to take a peek at the latest action regarding Guaranty Bancorp (NASDAQ:GBNK).
What does the smart money think about Guaranty Bancorp (NASDAQ:GBNK)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in GBNK heading into this year. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Matthew Lindenbaum of Basswood Capital holds the most valuable position in Guaranty Bancorp (NASDAQ:GBNK). Basswood Capital has a $23.1 million position in the stock, comprising 1.1% of its 13F portfolio. Coming in second is Emanuel J. Friedman of EJF Capital, with a $16.3 million position; 1.3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions encompass Mark Lee’s Forest Hill Capital, Chuck Royce’s Royce & Associates and Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world. We should note that none of these elite funds are among our list of the 100 best performing elite 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: Mendon Capital Advisors. 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 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Guaranty Bancorp (NASDAQ:GBNK) but similarly valued. These stocks are Ascendis Pharma A/S (NASDAQ:ASND), Overstock.com, Inc. (NASDAQ:OSTK), Myers Industries, Inc. (NYSE:MYE), and Axcelis Technologies Inc (NASDAQ:ACLS). This group of stocks’ market valuations match GBNK’s market valuation.
Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
---|---|---|---|
ASND | 12 | 154777 | 1 |
OSTK | 12 | 83600 | 0 |
MYE | 9 | 68835 | 0 |
ACLS | 10 | 57942 | -2 |
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 $91 million. That figure was $70 million in GBNK’s case. Ascendis Pharma A/S (NASDAQ:ASND) is the most popular stock in this table. On the other hand Myers Industries, Inc. (NYSE:MYE) is the least popular one with only 9 bullish hedge fund positions. Guaranty Bancorp (NASDAQ:GBNK) 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 ASND might be a better candidate to consider taking a long position in.
Disclosure: None