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Hedge Funds Have Never Been This Bullish On Green Dot Corporation (GDOT)

Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 9 percentage points since the end of the third quarter of 2018 as investors worried over the possible ramifications of rising interest rates and escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Green Dot Corporation (NYSE:GDOT) and see how the stock is affected by the recent hedge fund activity.

Is Green Dot Corporation (NYSE:GDOT) a buy, sell, or hold? Prominent investors are getting more bullish. The number of long hedge fund positions rose by 8 in recent months. Our calculations also showed that gdot isn’t among the 30 most popular stocks among hedge funds.

If you’d ask most traders, hedge funds are seen as underperforming, outdated financial tools of yesteryear. While there are more than 8000 funds trading at the moment, Our researchers look at the moguls of this club, about 750 funds. It is estimated that this group of investors watch over most of the hedge fund industry’s total asset base, and by shadowing their matchless investments, Insider Monkey has unearthed a few investment strategies that have historically outperformed the market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.

John Overdeck of Two Sigma

We’re going to take a glance at the new hedge fund action surrounding Green Dot Corporation (NYSE:GDOT).

What does the smart money think about Green Dot Corporation (NYSE:GDOT)?

Heading into the second quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 42% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GDOT over the last 15 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

No of Hedge Funds with GDOT Positions

Among these funds, Renaissance Technologies held the most valuable stake in Green Dot Corporation (NYSE:GDOT), which was worth $53.4 million at the end of the first quarter. On the second spot was D E Shaw which amassed $26.8 million worth of shares. Moreover, Citadel Investment Group, Millennium Management, and Two Sigma Advisors were also bullish on Green Dot Corporation (NYSE:GDOT), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the biggest position in Green Dot Corporation (NYSE:GDOT). Citadel Investment Group had $22.6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $10.6 million position during the quarter. The following funds were also among the new GDOT investors: Dmitry Balyasny’s Balyasny Asset Management, Martin Hughes’s Toscafund Asset Management, and Anand Parekh’s Alyeska Investment Group.

Let’s go over hedge fund activity in other stocks similar to Green Dot Corporation (NYSE:GDOT). These stocks are Axon Enterprise, Inc. (NASDAQ:AAXN), Navistar International Corp (NYSE:NAV), RLI Corp. (NYSE:RLI), and AMC Networks Inc (NASDAQ:AMCX). All of these stocks’ market caps are similar to GDOT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AAXN 19 247525 3
NAV 23 1335795 3
RLI 13 140748 1
AMCX 20 259491 1
Average 18.75 495890 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $496 million. That figure was $234 million in GDOT’s case. Navistar International Corp (NYSE:NAV) is the most popular stock in this table. On the other hand RLI Corp. (NYSE:RLI) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Green Dot Corporation (NYSE:GDOT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately GDOT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GDOT were disappointed as the stock returned -22.4% during the same period 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 13 of these stocks already outperformed the market in Q2.

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

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