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Did Hedge Funds Drop The Ball On Green Plains Inc. (GPRE) ?

Is Green Plains Inc. (NASDAQ:GPRE) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Green Plains Inc. (NASDAQ:GPRE) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that gpre isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Nathaniel August - Mangrove Partners

We’re going to go over the recent hedge fund action regarding Green Plains Inc. (NASDAQ:GPRE).

How are hedge funds trading Green Plains Inc. (NASDAQ:GPRE)?

At Q4’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GPRE over the last 14 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

No of Hedge Funds with GPRE Positions

More specifically, Rubric Capital Management was the largest shareholder of Green Plains Inc. (NASDAQ:GPRE), with a stake worth $32.6 million reported as of the end of December. Trailing Rubric Capital Management was Mangrove Partners, which amassed a stake valued at $30.2 million. Citadel Investment Group, Carlson Capital, and Highbridge Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers have jumped into Green Plains Inc. (NASDAQ:GPRE) headfirst. Highbridge Capital Management, managed by Glenn Russell Dubin, assembled the largest position in Green Plains Inc. (NASDAQ:GPRE). Highbridge Capital Management had $8.7 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $2.9 million investment in the stock during the quarter. The other funds with brand new GPRE positions are David Costen Haley’s HBK Investments and Jim Simons’s Renaissance Technologies.

Let’s go over hedge fund activity in other stocks similar to Green Plains Inc. (NASDAQ:GPRE). We will take a look at Primo Water Corporation (NASDAQ:PRMW), Viomi Technology Co., Ltd (NASDAQ:VIOT), Oasis Midstream Partners LP (NYSE:OMP), and Quantenna Communications, Inc. (NASDAQ:QTNA). This group of stocks’ market caps are closest to GPRE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRMW 14 138113 -2
VIOT 3 24289 -3
OMP 3 14603 1
QTNA 22 69071 6
Average 10.5 61519 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $116 million in GPRE’s case. Quantenna Communications, Inc. (NASDAQ:QTNA) is the most popular stock in this table. On the other hand Viomi Technology Co., Ltd (NASDAQ:VIOT) is the least popular one with only 3 bullish hedge fund positions. Green Plains Inc. (NASDAQ:GPRE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on GPRE as the stock returned 32.5% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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