Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) from the perspective of those elite funds.
Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) was in 24 hedge funds’ portfolios at the end of the third quarter of 2019. GLDD investors should be aware of an increase in activity from the world’s largest hedge funds lately. There were 22 hedge funds in our database with GLDD holdings at the end of the previous quarter. Our calculations also showed that GLDD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Nelson Obus of Wynnefield Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the fresh hedge fund action regarding Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD).
What does smart money think about Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)?
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in GLDD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), with a stake worth $21.2 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $15.7 million. AQR Capital Management, Minerva Advisors, and Wynnefield Capital 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 Minerva Advisors allocated the biggest weight to Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), around 6.17% of its portfolio. Wynnefield Capital is also relatively very bullish on the stock, setting aside 5.25 percent of its 13F equity portfolio to GLDD.
As industrywide interest jumped, some big names have jumped into Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) headfirst. Encompass Capital Advisors, managed by Todd J. Kantor, created the largest position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD). Encompass Capital Advisors had $4 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) but similarly valued. We will take a look at Foundation Building Materials, Inc. (NYSE:FBM), Plug Power, Inc. (NASDAQ:PLUG), Barrett Business Services, Inc. (NASDAQ:BBSI), and Houghton Mifflin Harcourt Company (NASDAQ:HMHC). All of these stocks’ market caps are similar to GLDD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FBM | 24 | 74715 | 14 |
| PLUG | 9 | 44087 | 1 |
| BBSI | 11 | 76189 | 0 |
| HMHC | 13 | 191389 | -1 |
| Average | 14.25 | 96595 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $104 million in GLDD’s case. Foundation Building Materials, Inc. (NYSE:FBM) is the most popular stock in this table. On the other hand Plug Power, Inc. (NASDAQ:PLUG) is the least popular one with only 9 bullish hedge fund positions. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GLDD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GLDD were disappointed as the stock returned 2.2% during the fourth quarter (through the end of November) 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.
