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Hedge Fund Sentiment Is Stagnant On Gafisa SA (ADR) (GFA)

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Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually, their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Gafisa SA (ADR) (NYSE:GFA).

Gafisa SA (ADR) (NYSE:GFA) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September. 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 Sizmek Inc (NASDAQ:SZMK), Autobytel Inc. (NASDAQ:ABTL), and Mattson Technology, Inc. (NASDAQ:MTSN) to gather more data points.

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To the average investor, there are a large number of methods market participants can use to evaluate publicly traded companies. A couple of the best methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best money managers can outperform their index-focused peers by a very impressive amount (see the details here).

Keeping this in mind, we’re going to go over the key action surrounding Gafisa SA (ADR) (NYSE:GFA).

How have hedgies been trading Gafisa SA (ADR) (NYSE:GFA)?

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jim Simons’s Renaissance Technologies has the biggest position in Gafisa SA (ADR) (NYSE:GFA), worth close to $0.6 million, accounting for less than 0.1% of its total 13F portfolio. On Renaissance Technologies’s heels is Orbis Investment Management, managed by William B. Gray, which holds a $0.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D. E. Shaw’s D E Shaw and Chao Ku’s Nine Chapters Capital Management.

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