With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Green Bancorp Inc (NASDAQ:GNBC).
Green Bancorp Inc (NASDAQ:GNBC) was in 11 hedge funds’ portfolios at the end of September. GNBC has experienced an increase in hedge fund sentiment recently. There were 8 hedge funds in our database with GNBC positions at the end of the previous quarter. Our calculations also showed that GNBC isn’t among the 30 most popular stocks among hedge funds.
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 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 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.
We’re going to take a glance at the latest hedge fund action surrounding Green Bancorp Inc (NASDAQ:GNBC).
What does the smart money think about Green Bancorp Inc (NASDAQ:GNBC)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in GNBC over the last 13 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Mendon Capital Advisors, managed by Anton Schutz, holds the largest position in Green Bancorp Inc (NASDAQ:GNBC). Mendon Capital Advisors has a $5.7 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Marshall Wace LLP, managed by Paul Marshall and Ian Wace, which holds a $3.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish encompass John Overdeck and David Siegel’s Two Sigma Advisors, John Orrico’s Water Island Capital and Alec Litowitz and Ross Laser’s Magnetar Capital.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in Green Bancorp Inc (NASDAQ:GNBC). Marshall Wace LLP had $3.1 million invested in the company at the end of the quarter. John Orrico’s Water Island Capital also initiated a $2 million position during the quarter. The following funds were also among the new GNBC investors: Alec Litowitz and Ross Laser’s Magnetar Capital, Paul Tudor Jones’s Tudor Investment Corp, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Green Bancorp Inc (NASDAQ:GNBC). We will take a look at Tidewater Inc. (NYSE:TDW), Blackrock MuniYield Quality Fund III, Inc. (NYSE:MYI), Addus Homecare Corporation (NASDAQ:ADUS), and Byline Bancorp, Inc. (NYSE:BY). This group of stocks’ market valuations are similar to GNBC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TDW | 11 | 89401 | 2 |
| MYI | 3 | 2250 | 0 |
| ADUS | 18 | 50221 | 9 |
| BY | 4 | 23624 | 2 |
| Average | 9 | 41374 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $19 million in GNBC’s case. Addus Homecare Corporation (NASDAQ:ADUS) is the most popular stock in this table. On the other hand Blackrock MuniYield Quality Fund III, Inc. (NYSE:MYI) is the least popular one with only 3 bullish hedge fund positions. Green Bancorp Inc (NASDAQ:GNBC) 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 ADUS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
