Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Green Plains Inc. (NASDAQ:GPRE)? The smart money sentiment can provide an answer to this question.
Green Plains Inc. (NASDAQ:GPRE) was in 27 hedge funds’ portfolios at the end of March. The all time high for this statistic is 27. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. GPRE shareholders have witnessed an increase in enthusiasm from smart money recently. There were 17 hedge funds in our database with GPRE holdings at the end of December. Our calculations also showed that GPRE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Today there are many tools investors use to appraise stocks. Two of the less known tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top hedge fund managers can beat their index-focused peers by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to check out the key hedge fund action regarding Green Plains Inc. (NASDAQ:GPRE).
Do Hedge Funds Think GPRE Is A Good Stock To Buy Now?
At the end of March, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 59% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in GPRE over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Rubric Capital Management, managed by David Rosen, holds the biggest position in Green Plains Inc. (NASDAQ:GPRE). Rubric Capital Management has a $36 million position in the stock, comprising 2.1% of its 13F portfolio. Coming in second is D E Shaw, led by D. E. Shaw, holding a $35.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Renaissance Technologies, Todd J. Kantor’s Encompass Capital Advisors and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Rubric Capital Management allocated the biggest weight to Green Plains Inc. (NASDAQ:GPRE), around 2.11% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, setting aside 1.96 percent of its 13F equity portfolio to GPRE.
Now, specific money managers were leading the bulls’ herd. Driehaus Capital, managed by Richard Driehaus, assembled the most valuable position in Green Plains Inc. (NASDAQ:GPRE). Driehaus Capital had $22.9 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $18.1 million position during the quarter. The other funds with brand new GPRE positions are Till Bechtolsheimer’s Arosa Capital Management, Ed Bosek’s BeaconLight Capital, and Matthew L Pinz’s Pinz Capital.
Let’s go over hedge fund activity in other stocks similar to Green Plains Inc. (NASDAQ:GPRE). We will take a look at Meredith Corporation (NYSE:MDP), Merchants Bancorp (NASDAQ:MBIN), Radware Ltd. (NASDAQ:RDWR), MYR Group Inc (NASDAQ:MYRG), New Mountain Finance Corp. (NASDAQ:NMFC), Atara Biotherapeutics Inc (NASDAQ:ATRA), and The Bancorp, Inc. (NASDAQ:TBBK). This group of stocks’ market values resemble GPRE’s market value.
|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 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was $260 million in GPRE’s case. Meredith Corporation (NYSE:MDP) is the most popular stock in this table. On the other hand New Mountain Finance Corp. (NASDAQ:NMFC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Green Plains Inc. (NASDAQ:GPRE) is more popular among hedge funds. Our overall hedge fund sentiment score for GPRE is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 24% in 2021 through July 9th but still managed to beat the market by 6.7 percentage points. Hedge funds were also right about betting on GPRE as the stock returned 26.1% since the end of March (through 7/9) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.