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Hedge Funds Are Selling Great Lakes Dredge & Dock Corporation (GLDD)

In this article we will take a look at whether hedge funds think Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) shareholders have witnessed a decrease in hedge fund interest recently. Our calculations also showed that GLDD 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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 we’re going to review the key hedge fund action regarding Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD).

What does smart money think about Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)?

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GLDD over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), with a stake worth $20.9 million reported as of the end of September. Trailing Renaissance Technologies was Encompass Capital Advisors, which amassed a stake valued at $11.9 million. D E Shaw, Minerva Advisors, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), around 6.8% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, dishing out 6.68 percent of its 13F equity portfolio to GLDD.

Since Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few money managers that decided to sell off their positions entirely last quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $3.6 million in stock, and Matt Diserio and Disque Deane Jr.’s Water Asset Management was right behind this move, as the fund dropped about $1.6 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 5 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) but similarly valued. We will take a look at Universal Electronics Inc (NASDAQ:UEIC), Sleep Number Corporation (NASDAQ:SNBR), NV5 Global, Inc. (NASDAQ:NVEE), and ConnectOne Bancorp Inc (NASDAQ:CNOB). This group of stocks’ market values are similar to GLDD’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UEIC 13 21742 1
SNBR 20 64714 0
NVEE 9 11304 0
CNOB 11 32159 0
Average 13.25 32480 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $78 million in GLDD’s case. Sleep Number Corporation (NASDAQ:SNBR) is the most popular stock in this table. On the other hand NV5 Global, Inc. (NASDAQ:NVEE) is the least popular one with only 9 bullish hedge fund positions. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately GLDD wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GLDD were disappointed as the stock returned 10.2% during the same time period 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.