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Hedge Funds Are Selling Gulf Island Fabrication, Inc. (GIFI)

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 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Gulf Island Fabrication, Inc. (NASDAQ:GIFI).

Gulf Island Fabrication, Inc. (NASDAQ:GIFI) was in 8 hedge funds’ portfolios at the end of the first quarter of 2020. GIFI has experienced a decrease in hedge fund sentiment of late. There were 10 hedge funds in our database with GIFI positions at the end of the previous quarter. Our calculations also showed that GIFI 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

John Rogers Ariel Investments

John Rogers of Ariel Investments

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind let’s take a peek at the latest hedge fund action regarding Gulf Island Fabrication, Inc. (NASDAQ:GIFI).

Hedge fund activity in Gulf Island Fabrication, Inc. (NASDAQ:GIFI)

Heading into the second quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in GIFI a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Gulf Island Fabrication, Inc. (NASDAQ:GIFI), with a stake worth $1.5 million reported as of the end of September. Trailing Renaissance Technologies was Solas Capital Management, which amassed a stake valued at $1.3 million. Millennium Management, Ariel Investments, and Prescott Group 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 Solas Capital Management allocated the biggest weight to Gulf Island Fabrication, Inc. (NASDAQ:GIFI), around 1.41% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, dishing out 0.22 percent of its 13F equity portfolio to GIFI.

Judging by the fact that Gulf Island Fabrication, Inc. (NASDAQ:GIFI) has witnessed declining sentiment from hedge fund managers, logic holds that there exists a select few fund managers who sold off their entire stakes in the first quarter. Interestingly, Frederick DiSanto’s Ancora Advisors dumped the biggest investment of the 750 funds monitored by Insider Monkey, valued at close to $1.1 million in stock, and Bradley Louis Radoff’s Fondren Management was right behind this move, as the fund cut about $0.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Gulf Island Fabrication, Inc. (NASDAQ:GIFI). We will take a look at Ocean Bio-Chem, Inc. (NASDAQ:OBCI), Medallion Financial Corp. (NASDAQ:MFIN), Great Elm Capital Group, Inc. (NASDAQ:GEC), and Dover Motorsports, Inc. (NYSE:DVD). This group of stocks’ market valuations are closest to GIFI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OBCI 1 575 0
MFIN 4 3000 -1
GEC 7 15496 -1
DVD 5 4589 0
Average 4.25 5915 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $5 million in GIFI’s case. Great Elm Capital Group, Inc. (NASDAQ:GEC) is the most popular stock in this table. On the other hand Ocean Bio-Chem, Inc. (NASDAQ:OBCI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Gulf Island Fabrication, Inc. (NASDAQ:GIFI) is more popular among hedge funds. 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 and still beat the market by 14.8 percentage points. Unfortunately GIFI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GIFI were disappointed as the stock returned 0.7% during the second quarter (through June 17th) 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 most of these stocks already outperformed the market in 2020.

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