In this article we are going to use hedge fund sentiment as a tool and determine whether Gamco Investors Inc. (NYSE:GBL) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Gamco Investors Inc. (NYSE:GBL) has experienced a decrease in hedge fund sentiment recently. Gamco Investors Inc. (NYSE:GBL) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 11. Our calculations also showed that GBL 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
Mario Gabelli of GAMCO Investors
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 let’s take a peek at the latest hedge fund action surrounding Gamco Investors Inc. (NYSE:GBL).
What have hedge funds been doing with Gamco Investors Inc. (NYSE:GBL)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GBL over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Horizon Asset Management was the largest shareholder of Gamco Investors Inc. (NYSE:GBL), with a stake worth $3.8 million reported as of the end of September. Trailing Horizon Asset Management was Renaissance Technologies, which amassed a stake valued at $1.2 million. MFP Investors, GAMCO Investors, and Winton Capital Management 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 Horizon Asset Management allocated the biggest weight to Gamco Investors Inc. (NYSE:GBL), around 0.15% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, designating 0.13 percent of its 13F equity portfolio to GBL.
Because Gamco Investors Inc. (NYSE:GBL) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of fund managers that decided to sell off their positions entirely last quarter. At the top of the heap, Roger Ibbotson’s Zebra Capital Management dumped the largest position of the 750 funds tracked by Insider Monkey, worth close to $0.3 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dropped its stock, about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Gamco Investors Inc. (NYSE:GBL). These stocks are Seneca Foods Corp. (NASDAQ:SENEB), EVI Industries Inc (NYSE:EVI), CorePoint Lodging Inc. (NYSE:CPLG), Repro Med Systems, Inc. (NASDAQ:KRMD), HEXO Corp. (NYSE:HEXO), Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), and Capital City Bank Group, Inc. (NASDAQ:CCBG). This group of stocks’ market valuations are closest to GBL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SENEB | 2 | 2190 | 0 |
| EVI | 1 | 18552 | -1 |
| CPLG | 10 | 24538 | -2 |
| KRMD | 15 | 15709 | 0 |
| HEXO | 4 | 374 | -1 |
| AGLE | 22 | 147695 | 3 |
| CCBG | 6 | 6349 | 3 |
| Average | 8.6 | 30772 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $7 million in GBL’s case. Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is the most popular stock in this table. On the other hand EVI Industries Inc (NYSE:EVI) is the least popular one with only 1 bullish hedge fund positions. Gamco Investors Inc. (NYSE:GBL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GBL is 30.3. 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 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on GBL as the stock returned 22.8% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
Follow Gamco Investors Inc. Et Al (NYSE:GBL)
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Disclosure: None. This article was originally published at Insider Monkey.
