As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about GSE Systems, Inc. (NYSE:GVP).
Is GVP stock a buy? The best stock pickers were getting more bullish. The number of long hedge fund bets moved up by 2 in recent months. GSE Systems, Inc. (NYSE:GVP) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. Our calculations also showed that GVP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Jim Simons of Renaissance Technologies
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s take a look at the fresh hedge fund action surrounding GSE Systems, Inc. (NYSE:GVP).
Do Hedge Funds Think GVP Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GVP over the last 23 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the number one position in GSE Systems, Inc. (NYSE:GVP). Renaissance Technologies has a $1.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is David P. Cohen of Minerva Advisors, with a $0.8 million position; 0.5% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Mark Broach’s Manatuck Hill Partners, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to GSE Systems, Inc. (NYSE:GVP), around 0.46% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to GVP.
Consequently, key hedge funds were leading the bulls’ herd. Manatuck Hill Partners, managed by Mark Broach, assembled the most valuable position in GSE Systems, Inc. (NYSE:GVP). Manatuck Hill Partners had $0.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let’s check out hedge fund activity in other stocks similar to GSE Systems, Inc. (NYSE:GVP). These stocks are Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF), AutoWeb, Inc. (NASDAQ:AUTO), Auddia Inc. (NASDAQ:AUUD), Invivo Therapeutics Holdings Corp (NASDAQ:NVIV), Cemtrex Inc. (NASDAQ:CETX), HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM), and Psychemedics Corp. (NASDAQ:PMD). This group of stocks’ market values are closest to GVP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JCTCF | 1 | 1688 | 0 |
| AUTO | 3 | 1756 | -1 |
| AUUD | 2 | 115 | 2 |
| NVIV | 3 | 521 | 1 |
| CETX | 2 | 184 | 1 |
| HTGM | 5 | 6472 | 2 |
| PMD | 3 | 3793 | -1 |
| Average | 2.7 | 2076 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $3 million in GVP’s case. HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM) is the most popular stock in this table. On the other hand Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF) is the least popular one with only 1 bullish hedge fund positions. GSE Systems, Inc. (NYSE:GVP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GVP is 68.5. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on GVP as the stock returned 12.9% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
