Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about The Geo Group, Inc. (NYSE:GEO).
The Geo Group, Inc. (NYSE:GEO) investors should be aware of a decrease in hedge fund sentiment in recent months. GEO was in 16 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with GEO positions at the end of the previous quarter. At the end of this article we will also compare GEO to other stocks including DiamondRock Hospitality Company (NYSE:DRH), Euronav NV Ordinary Shares (NYSE:EURN), and QEP Resources Inc (NYSE:QEP) to get a better sense of its popularity.
With all of this in mind, we’re going to go over the key action encompassing The Geo Group, Inc. (NYSE:GEO).
What have hedge funds been doing with The Geo Group, Inc. (NYSE:GEO)?
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the largest position in The Geo Group, Inc. (NYSE:GEO), worth close to $17.9 million, accounting for less than 0.1% of its total 13F portfolio. Coming in second is SG Capital Management, led by Ken Grossman and Glen Schneider, holding a $12.5 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions comprise David Dreman’s Dreman Value Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Greg Poole’s Echo Street Capital Management.
Because The Geo Group, Inc. (NYSE:GEO) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedgies who sold off their entire stakes in the third quarter. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors said goodbye to the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $3.5 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund cut about $0.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Geo Group, Inc. (NYSE:GEO) but similarly valued. We will take a look at DiamondRock Hospitality Company (NYSE:DRH), Euronav NV Ordinary Shares (NYSE:EURN), QEP Resources Inc (NYSE:QEP), and Valmont Industries, Inc. (NYSE:VMI). This group of stocks’ market values are similar to GEO’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $266 million. That figure was $73 million in GEO’s case. Euronav NV Ordinary Shares (NYSE:EURN) is the most popular stock in this table. On the other hand DiamondRock Hospitality Company (NYSE:DRH) is the least popular one with only 13 bullish hedge fund positions. The Geo Group, Inc. (NYSE:GEO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EURN might be a better candidate to consider a long position.