We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of Genius Brands International, Inc. (NASDAQ:GNUS) based on that data.
Hedge fund interest in Genius Brands International, Inc. (NASDAQ:GNUS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that GNUS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Aspen Aerogels Inc (NYSE:ASPN), Ontrak, Inc. (NASDAQ:OTRK), and Magenta Therapeutics, Inc. (NASDAQ:MGTA) to gather more data points.
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.
Gavin Saitowitz of Prelude Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $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. With all of this in mind we’re going to go over the recent hedge fund action surrounding Genius Brands International, Inc. (NASDAQ:GNUS).
Do Hedge Funds Think GNUS Is A Good Stock To Buy Now?
At first quarter’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in GNUS over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Genius Brands International, Inc. (NASDAQ:GNUS), which was worth $3.2 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $1.4 million worth of shares. Millennium Management, PEAK6 Capital Management, and Prelude Capital (previously Springbok Capital) 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 Prelude Capital (previously Springbok Capital) allocated the biggest weight to Genius Brands International, Inc. (NASDAQ:GNUS), around 0.01% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to GNUS.
Due to the fact that Genius Brands International, Inc. (NASDAQ:GNUS) has faced falling interest from hedge fund managers, it’s easy to see that there exists a select few hedge funds who sold off their positions entirely in the first quarter. At the top of the heap, Matthew Hulsizer’s PEAK6 Capital Management sold off the largest position of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $0.1 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also sold off its stock, about $0.1 million worth. These bearish behaviors are intriguing to say the least, 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 Genius Brands International, Inc. (NASDAQ:GNUS) but similarly valued. We will take a look at Aspen Aerogels Inc (NYSE:ASPN), Ontrak, Inc. (NASDAQ:OTRK), Magenta Therapeutics, Inc. (NASDAQ:MGTA), Dynex Capital Inc (NYSE:DX), Rayonier Advanced Materials Inc (NYSE:RYAM), Titan Machinery Inc. (NASDAQ:TITN), and Oportun Financial Corporation (NASDAQ:OPRT). This group of stocks’ market caps resemble GNUS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASPN | 13 | 88783 | 4 |
| OTRK | 7 | 11834 | -6 |
| MGTA | 17 | 123130 | 1 |
| DX | 10 | 23691 | 0 |
| RYAM | 16 | 60987 | 3 |
| TITN | 12 | 41243 | -1 |
| OPRT | 4 | 14505 | -1 |
| Average | 11.3 | 52025 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.3 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $5 million in GNUS’s case. Magenta Therapeutics, Inc. (NASDAQ:MGTA) is the most popular stock in this table. On the other hand Oportun Financial Corporation (NASDAQ:OPRT) is the least popular one with only 4 bullish hedge fund positions. Genius Brands International, Inc. (NASDAQ:GNUS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GNUS is 42.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately GNUS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GNUS investors were disappointed as the stock returned 3.6% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
