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Hedge Funds Aren’t Crazy About Grupo Financiero Galicia S.A. (GGAL) Anymore

The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Grupo Financiero Galicia S.A. (NASDAQ:GGAL) based on those filings.

Is Grupo Financiero Galicia S.A. (NASDAQ:GGAL) the right pick for your portfolio? Hedge funds are in a pessimistic mood. The number of long hedge fund bets were trimmed by 1 recently. Our calculations also showed that GGAL isn’t among the 30 most popular stocks among hedge funds. GGAL was in 15 hedge funds’ portfolios at the end of the third quarter of 2018. There were 16 hedge funds in our database with GGAL positions at the end of the previous quarter.

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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Crispin Odey

We’re going to take a look at the recent hedge fund action regarding Grupo Financiero Galicia S.A. (NASDAQ:GGAL).

What does the smart money think about Grupo Financiero Galicia S.A. (NASDAQ:GGAL)?

Heading into the fourth quarter of 2018, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GGAL over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

GGAL_dec2018

More specifically, EMS Capital was the largest shareholder of Grupo Financiero Galicia S.A. (NASDAQ:GGAL), with a stake worth $26.7 million reported as of the end of September. Trailing EMS Capital was Prince Street Capital Management, which amassed a stake valued at $15.4 million. Odey Asset Management Group, LMR Partners, and Discovery Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Since Grupo Financiero Galicia S.A. (NASDAQ:GGAL) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that decided to sell off their entire stakes last quarter. Intriguingly, Ryan Pedlow’s Two Creeks Capital Management cut the largest position of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $11.4 million in stock. Miguel Fidalgo’s fund, Triarii Capital, also dropped its stock, about $2.1 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Grupo Financiero Galicia S.A. (NASDAQ:GGAL). These stocks are Paramount Group Inc (NYSE:PGRE), Magnolia Oil & Gas Corporation (NYSE:MGY), Tenable Holdings, Inc. (NASDAQ:TENB), and Balchem Corporation (NASDAQ:BCPC). This group of stocks’ market caps are closest to GGAL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PGRE 12 290396 -1
MGY 37 472490 14
TENB 19 97706 19
BCPC 8 66720 -1
Average 19 231828 7.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $232 million. That figure was $85 million in GGAL’s case. Magnolia Oil & Gas Corporation (NYSE:MGY) is the most popular stock in this table. On the other hand Balchem Corporation (NASDAQ:BCPC) is the least popular one with only 8 bullish hedge fund positions. Grupo Financiero Galicia S.A. (NASDAQ:GGAL) 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 MGY might be a better candidate to consider a long position.

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

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