Hedge Funds Are Selling Geospace Technologies Corp (GEOS)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Geospace Technologies Corp (NASDAQ:GEOS) based on those filings.

Geospace Technologies Corp (NASDAQ:GEOS) shareholders have witnessed a decrease in hedge fund interest of late. Our calculations also showed that GEOS 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the fresh hedge fund action regarding Geospace Technologies Corp (NASDAQ:GEOS).

What have hedge funds been doing with Geospace Technologies Corp (NASDAQ:GEOS)?

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -43% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in GEOS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GEOS A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Rutabaga Capital Management, managed by Peter Schliemann, holds the number one position in Geospace Technologies Corp (NASDAQ:GEOS). Rutabaga Capital Management has a $2.4 million position in the stock, comprising 1.5% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $1.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions include Chuck Royce’s Royce & Associates, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and . In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Geospace Technologies Corp (NASDAQ:GEOS), around 1.47% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0013 percent of its 13F equity portfolio to GEOS.

Judging by the fact that Geospace Technologies Corp (NASDAQ:GEOS) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few money managers that slashed their full holdings heading into Q4. Intriguingly, Josh Goldberg’s G2 Investment Partners Management dropped the largest position of the 750 funds followed by Insider Monkey, worth close to $0.6 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also sold off its stock, about $0.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Geospace Technologies Corp (NASDAQ:GEOS). These stocks are Townsquare Media Inc (NYSE:TSQ), HMN Financial, Inc. (NASDAQ:HMNF), China Customer Relations Centers, Inc. (NASDAQ:CCRC), and Precision Drilling Corp (NYSE:PDS). This group of stocks’ market values match GEOS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TSQ 7 19176 -2
HMNF 4 22411 0
CCRC 1 110 -1
PDS 6 2762 -5
Average 4.5 11115 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $4 million in GEOS’s case. Townsquare Media Inc (NYSE:TSQ) is the most popular stock in this table. On the other hand China Customer Relations Centers, Inc. (NASDAQ:CCRC) is the least popular one with only 1 bullish hedge fund positions. Geospace Technologies Corp (NASDAQ:GEOS) is not the least popular stock in this group but hedge fund interest is still below average. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on GEOS as the stock returned 23.1% during 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.