The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Golden Ocean Group Ltd (NASDAQ:GOGL) and find out how it is affected by hedge funds’ moves.
Hedge fund interest in Golden Ocean Group Ltd (NASDAQ:GOGL) shares was flat at the end of last quarter. This is usually a negative indicator. Further, this shouldn’t come as a surprise, as the shares of the company were down 36.1% during the third quarter. We decided to find out more about hedge funds still holding stakes in Golden Ocean Group Ltd (NASDAQ:GOGL).
To find out more about the overall hedge fund sentiment, we will also compare Golden Ocean Group Ltd (NASDAQ:GOGL) to other stocks, including La Jolla Pharmaceutical Company (NASDAQ:LJPC), C&J Energy Services Inc (NYSE:CJES), and Century Communities, Inc (NYSE:CCS) to get a better sense of its popularity.
At the moment, there are several tools shareholders can use to assess stocks. A duo of the most useful tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the market by a significant margin (see the details here).
With all of this in mind, let’s go over the fresh action encompassing Golden Ocean Group Ltd (NASDAQ:GOGL).
What have hedge funds been doing with Golden Ocean Group Ltd (NASDAQ:GOGL)?
At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, BHR Capital, managed by Michael Thompson, holds the biggest position in Golden Ocean Group Ltd (NASDAQ:GOGL). BHR Capital has a $3.9 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Howard Marks of Oaktree Capital Management, with a $2.5 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include Paul Marshall and Ian Wace’s Marshall Wace LLP, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.
Seeing as Golden Ocean Group Ltd (NASDAQ:GOGL) has experienced a declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedgies who were dropping their positions entirely in the third quarter. At the top of the heap, Robert Henry Lynch’s Aristeia Capital said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, totaling about $0.9 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also cut its stock, about $0.1 million worth of shares. These bearish behaviors are important to note, 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 Golden Ocean Group Ltd (NASDAQ:GOGL) but similarly valued. We will take a look at La Jolla Pharmaceutical Company (NASDAQ:LJPC), C&J Energy Services Inc (NYSE:CJES), Century Communities, Inc (NYSE:CCS), and Patriot National Inc (NYSE:PN). This group of stocks’ market values match Golden Ocean Group Ltd (NASDAQ:GOGL)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LJPC | 14 | 193176 | 6 |
| CJES | 19 | 67571 | -1 |
| CCS | 18 | 78743 | 5 |
| PN | 6 | 25270 | 0 |
As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $7 million in Golden Ocean Group Ltd (NASDAQ:GOGL)’s case. C&J Energy Services Inc (NYSE:CJES) is the most popular stock in this table. On the other hand, Patriot National Inc (NYSE:PN) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks, Golden Ocean Group Ltd (NASDAQ:GOGL) is even less popular than Patriot National Inc (NYSE:PN). 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.