We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article, we look at what those funds think of GP Strategies Corporation (NYSE:GPX) based on that data.
Is GP Strategies Corporation (NYSE:GPX) a buy here? Money managers are taking a bullish view. The number of long hedge fund positions went up by 1 lately. Our calculations also showed that GPX isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 our short portfolio.
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let’s review the latest hedge fund action regarding GP Strategies Corporation (NYSE:GPX).
What does smart money think about GP Strategies Corporation (NYSE:GPX)?
Heading into the third quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the first quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in GPX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Sagard Capital Partners Management Corp held the most valuable stake in GP Strategies Corporation (NYSE:GPX), which was worth $54.9 million at the end of the second quarter. On the second spot was Cove Street Capital which amassed $32.1 million worth of shares. Moreover, Royce & Associates, Rutabaga Capital Management, and D E Shaw were also bullish on GP Strategies Corporation (NYSE:GPX), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in GP Strategies Corporation (NYSE:GPX). Arrowstreet Capital had $0.7 million invested in the company at the end of the quarter.
Let’s now review hedge fund activity in other stocks similar to GP Strategies Corporation (NYSE:GPX). We will take a look at Xinyuan Real Estate Co., Ltd. (NYSE:XIN), Hamilton Beach Brands Holding Company (NYSE:HBB), Intelligent Systems Corporation (NYSE:INS), and Aerohive Networks Inc (NYSE:HIVE). This group of stocks’ market caps are closest to GPX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $114 million in GPX’s case. Aerohive Networks Inc (NYSE:HIVE) is the most popular stock in this table. On the other hand Hamilton Beach Brands Holding Company (NYSE:HBB) is the least popular one with only 1 bullish hedge fund positions. GP Strategies Corporation (NYSE:GPX) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GPX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GPX were disappointed as the stock returned -14.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.