Hedge Funds Are Betting On Great Western Bancorp Inc (GWB)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Great Western Bancorp Inc (NYSE:GWB) and determine whether the smart money was really smart about this stock.

Is Great Western Bancorp Inc (NYSE:GWB) a sound investment right now? The best stock pickers were turning bullish. The number of long hedge fund bets moved up by 8 recently. Great Western Bancorp Inc (NYSE:GWB) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 24. Our calculations also showed that GWB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Michael Gelband of ExodusPoint Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a look at the latest hedge fund action regarding Great Western Bancorp Inc (NYSE:GWB).

What have hedge funds been doing with Great Western Bancorp Inc (NYSE:GWB)?

At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 80% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in GWB a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GWB A Good Stock To Buy?

The largest stake in Great Western Bancorp Inc (NYSE:GWB) was held by Citadel Investment Group, which reported holding $5.3 million worth of stock at the end of September. It was followed by D E Shaw with a $4.7 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Great Western Bancorp Inc (NYSE:GWB), around 0.93% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.3 percent of its 13F equity portfolio to GWB.

As aggregate interest increased, key money managers have jumped into Great Western Bancorp Inc (NYSE:GWB) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Great Western Bancorp Inc (NYSE:GWB). Arrowstreet Capital had $4.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $1.5 million position during the quarter. The other funds with brand new GWB positions are Dmitry Balyasny’s Balyasny Asset Management, Phil Stone’s Fourthstone LLC, and Hoon Kim’s Quantinno Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Great Western Bancorp Inc (NYSE:GWB) but similarly valued. These stocks are DHT Holdings Inc (NYSE:DHT), Cellectis SA (NASDAQ:CLLS), Keros Therapeutics, Inc. (NASDAQ:KROS), Accel Entertainment, Inc. (NYSE:ACEL), AGM Group Holdings Inc. (NASDAQ:AGMH), Cincinnati Bell Inc. (NYSE:CBB), and Scorpio Tankers Inc. (NYSE:STNG). All of these stocks’ market caps resemble GWB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DHT 18 146575 -16
CLLS 13 34700 3
KROS 11 191729 11
ACEL 16 76007 -2
AGMH 1 302 1
CBB 15 115869 -1
STNG 18 45744 -7
Average 13.1 87275 -1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $28 million in GWB’s case. DHT Holdings Inc (NYSE:DHT) is the most popular stock in this table. On the other hand AGM Group Holdings Inc. (NASDAQ:AGMH) is the least popular one with only 1 bullish hedge fund positions. Great Western Bancorp Inc (NYSE:GWB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GWB is 82.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately GWB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GWB were disappointed as the stock returned -9.5% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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