Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Greenlane Holdings, Inc. (NASDAQ:GNLN).
Is Greenlane Holdings, Inc. (NASDAQ:GNLN) the right investment to pursue these days? The smart money is betting on the stock. The number of bullish hedge fund bets went up by 6 lately. Our calculations also showed that GNLN isn’t among the 30 most popular stocks among hedge funds (see the video below). GNLN was in 6 hedge funds’ portfolios at the end of the second quarter of 2019. There were 0 hedge funds in our database with GNLN holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are many indicators stock traders use to evaluate stocks. A pair of the most under-the-radar indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can trounce the broader indices by a solid margin (see the details here).
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We’re going to view the key hedge fund action surrounding Greenlane Holdings, Inc. (NASDAQ:GNLN).
How have hedgies been trading Greenlane Holdings, Inc. (NASDAQ:GNLN)?
Heading into the third quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6 from the previous quarter. The graph below displays the number of hedge funds with bullish position in GNLN over the last 16 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Moore Global Investments was the largest shareholder of Greenlane Holdings, Inc. (NASDAQ:GNLN), with a stake worth $8.5 million reported as of the end of March. Trailing Moore Global Investments was Alyeska Investment Group, which amassed a stake valued at $6.9 million. Pura Vida Investments, Arrowgrass Capital Partners, and Ardsley Partners were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Moore Global Investments, managed by Louis Bacon, assembled the most valuable position in Greenlane Holdings, Inc. (NASDAQ:GNLN). Moore Global Investments had $8.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $6.9 million position during the quarter. The other funds with brand new GNLN positions are Efrem Kamen’s Pura Vida Investments, Nick Niell’s Arrowgrass Capital Partners, and Philip Hempleman’s Ardsley Partners.
Let’s also examine hedge fund activity in other stocks similar to Greenlane Holdings, Inc. (NASDAQ:GNLN). We will take a look at Guaranty Bancshares, Inc. (NASDAQ:GNTY), Exantas Capital Corp. (NYSE:XAN), Citizens & Northern Corporation (NASDAQ:CZNC), and Neptune Wellness Solutions Inc. (NASDAQ:NEPT). This group of stocks’ market caps are closest to GNLN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GNTY | 3 | 3672 | -1 |
| XAN | 16 | 64628 | -1 |
| CZNC | 2 | 7044 | -1 |
| NEPT | 8 | 32369 | 0 |
| Average | 7.25 | 26928 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $21 million in GNLN’s case. Exantas Capital Corp. (NYSE:XAN) is the most popular stock in this table. On the other hand Citizens & Northern Corporation (NASDAQ:CZNC) is the least popular one with only 2 bullish hedge fund positions. Greenlane Holdings, Inc. (NASDAQ:GNLN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GNLN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GNLN investors were disappointed as the stock returned -64.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.