How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding P.H. Glatfelter Company (NYSE:GLT) and determine whether hedge funds had an edge regarding this stock.
P.H. Glatfelter Company (NYSE:GLT) has seen an increase in hedge fund interest in recent months. GLT was in 11 hedge funds’ portfolios at the end of the first quarter of 2020. There were 10 hedge funds in our database with GLT holdings at the end of the previous quarter. Our calculations also showed that GLT isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the new hedge fund action surrounding P.H. Glatfelter Company (NYSE:GLT).
What does smart money think about P.H. Glatfelter Company (NYSE:GLT)?
At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GLT over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Carlson Capital, managed by Clint Carlson, holds the biggest position in P.H. Glatfelter Company (NYSE:GLT). Carlson Capital has a $14.2 million position in the stock, comprising 0.4% of its 13F portfolio. On Carlson Capital’s heels is Chuck Royce of Royce & Associates, with a $5.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP and Renaissance Technologies. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to P.H. Glatfelter Company (NYSE:GLT), around 0.49% of its 13F portfolio. Carlson Capital is also relatively very bullish on the stock, earmarking 0.37 percent of its 13F equity portfolio to GLT.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Renaissance Technologies, initiated the biggest position in P.H. Glatfelter Company (NYSE:GLT). Renaissance Technologies had $0.7 million invested in the company at the end of the quarter. Ali Motamed’s Invenomic Capital Management also made a $0.6 million investment in the stock during the quarter. The other funds with brand new GLT positions are Greg Eisner’s Engineers Gate Manager, Mike Vranos’s Ellington, and Cliff Asness’s AQR Capital Management.
Let’s check out hedge fund activity in other stocks similar to P.H. Glatfelter Company (NYSE:GLT). We will take a look at Costamare Inc (NYSE:CMRE), Argan, Inc. (NYSE:AGX), Star Bulk Carriers Corp. (NASDAQ:SBLK), and MBIA Inc. (NYSE:MBI). All of these stocks’ market caps resemble GLT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMRE | 14 | 32870 | -3 |
| AGX | 12 | 69554 | -1 |
| SBLK | 11 | 255482 | -5 |
| MBI | 15 | 108148 | -9 |
| Average | 13 | 116514 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $28 million in GLT’s case. MBIA Inc. (NYSE:MBI) is the most popular stock in this table. On the other hand Star Bulk Carriers Corp. (NASDAQ:SBLK) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks P.H. Glatfelter Company (NYSE:GLT) is even less popular than SBLK. Hedge funds clearly dropped the ball on GLT as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on GLT as the stock returned 32.9% in the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
