Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) a buy, sell, or hold? The smart money is actually becoming more confident. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings went up by 1 lately. GLDD was in 11 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with GLDD holdings at the end of the previous quarter. 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 Vishay Precision Group Inc (NYSE:VPG), Veracyte Inc (NASDAQ:VCYT), and Flex Pharma Inc (NASDAQ:FLKS) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
With all of this in mind, we’re going to take a peek at the new action regarding Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD).
What have hedge funds been doing with Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards GLDD over the last 5 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 increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Prescott Group Capital Management, led by Phil Frohlich, holds the biggest position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD). Prescott Group Capital Management has a $2.4 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates, with a $2 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism include D E Shaw, one of the biggest hedge funds in the world, and Charles Frumberg’s Emancipation Capital. We should note that none of these elite funds are among our list of the 100 best elite hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, key money managers were breaking ground themselves. Citadel Investment Group, led by Ken Griffin, initiated the most outsized position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD). Citadel Investment Group had $0.4 million invested in the company at the end of the quarter. Nelson Obus’s Wynnefield Capital also initiated a $0.4 million position during the quarter. The only other fund with a brand new GLDD position is John A. Levin’s Levin Capital Strategies.
Let’s also examine hedge fund activity in other stocks similar to Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD). These stocks are Vishay Precision Group Inc (NYSE:VPG), Veracyte Inc (NASDAQ:VCYT), Flex Pharma Inc (NASDAQ:FLKS), and Black Box Corporation (NASDAQ:BBOX). This group of stocks’ market valuations are closest to GLDD’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $9 million in GLDD’s case. Vishay Precision Group Inc (NYSE:VPG) is the most popular stock in this table. On the other hand Flex Pharma Inc (NASDAQ:FLKS) is the least popular one with only 4 bullish hedge fund positions. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is the most popular stock in this group, along with VPG. Given that, the stock may be worth a closer look.