At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Hedge fund interest in USG Corporation (NYSE:USG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare USG to other stocks including FNFV Group (NYSE:FNFV), Portland General Electric Company (NYSE:POR), and Gulfport Energy Corporation (NASDAQ:GPOR) to get a better sense of its popularity.
Follow Usg Corp (NYSE:USG)
Follow Usg Corp (NYSE:USG)
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 look at the latest action surrounding USG Corporation (NYSE:USG).
How are hedge funds trading USG Corporation (NYSE:USG)?
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the biggest position in USG Corporation (NYSE:USG), worth close to $1.01 billion. The second largest stake is held by Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $124 million position. Other peers that are bullish encompass Edgar Wachenheim’s Greenhaven Associates, Thomas E. Claugus’ GMT Capital and Jeffrey Bronchick’s Cove Street Capital.
Judging by the fact that USG Corporation (NYSE:USG) has experienced declining sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedgies who were dropping their full holdings by the end of the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group sold off the biggest stake of the 700 funds watched by Insider Monkey, totaling an estimated $9.6 million in call options, and Citadel Investment Group was right behind this move, as the fund cut about $3.7 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as USG Corporation (NYSE:USG) but similarly valued. These stocks are FNFV Group (NYSE:FNFV), Portland General Electric Company (NYSE:POR), Gulfport Energy Corporation (NASDAQ:GPOR), and Charles River Laboratories (NYSE:CRL). This group of stocks’ market caps match USG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FNFV | 19 | 205511 | -1 |
| POR | 13 | 88742 | -2 |
| GPOR | 34 | 816426 | -6 |
| CRL | 27 | 594201 | 0 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $426 million. That figure was $1.39 billion in USG’s case. Gulfport Energy Corporation (NASDAQ:GPOR) is the most popular stock in this table. On the other hand Portland General Electric Company (NYSE:POR) is the least popular one with only 13 bullish hedge fund positions. USG Corporation (NYSE:USG) 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 GPOR might be a better candidate to consider taking a long position in.
Disclosure: None
