Do Hedge Funds Love GATX Corporation (GATX)?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards GATX Corporation (NYSE:GATX) .

GATX Corporation (NYSE:GATX) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. GATX was in 11 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with GATX holdings at the end of June. 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 2U Inc (NASDAQ:TWOU), NovaGold Resources Inc. (USA) (NYSEAMEX:NG), and The Geo Group, Inc. (NYSE:GEO) to gather more data points.

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.

Now, we’re going to go over the key action encompassing GATX Corporation (NYSE:GATX).

Hedge fund activity in GATX Corporation (NYSE:GATX)

Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the second quarter of 2016. By comparison, 16 hedge funds held shares or bullish call options in GATX heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GAMCO Investors, led by Mario Gabelli, holds the biggest position in GATX Corporation (NYSE:GATX). GAMCO Investors has a $130.3 million position in the stock, comprising 0.8% of its 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, which holds a $13 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Charles Paquelet’s Skylands Capital and Renaissance Technologies, one of the largest hedge funds in the world. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that sold off their entire stakes in the stock during the third quarter. Interestingly, Jacob Gottlieb’s Visium Asset Management sold off the biggest stake of all the hedgies studied by Insider Monkey, totaling an estimated $5.1 million in call options. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $1.9 million worth.

Let’s check out hedge fund activity in other stocks similar to GATX Corporation (NYSE:GATX). These stocks are 2U Inc (NASDAQ:TWOU), NovaGold Resources Inc. (USA) (NYSEAMEX:NG), The Geo Group, Inc. (NYSE:GEO), and Talen Energy Corp (NYSE:TLN). This group of stocks’ market values resemble GATX’s market value.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $179 million. That figure was $175 million in GATX’s case. NovaGold Resources Inc. (USA) (NYSEAMEX:NG) is the most popular stock in this table. On the other hand The Geo Group, Inc. (NYSE:GEO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks GATX Corporation (NYSE:GATX) is even less popular than GEO. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None