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Hedge Funds Never Been Less Bullish On Greenbrier Companies Inc (GBX)

In this article we will take a look at whether hedge funds think Greenbrier Companies Inc (NYSE:GBX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Greenbrier Companies Inc (NYSE:GBX) the right investment to pursue these days? Prominent investors are in a pessimistic mood. The number of long hedge fund bets were trimmed by 4 in recent months. Our calculations also showed that GBX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). GBX was in 8 hedge funds’ portfolios at the end of March. There were 12 hedge funds in our database with GBX positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the latest hedge fund action encompassing Greenbrier Companies Inc (NYSE:GBX).

How have hedgies been trading Greenbrier Companies Inc (NYSE:GBX)?

At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in GBX over the last 18 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.

Is GBX A Good Stock To Buy?

Among these funds, Millennium Management held the most valuable stake in Greenbrier Companies Inc (NYSE:GBX), which was worth $6.1 million at the end of the third quarter. On the second spot was Skylands Capital which amassed $2.4 million worth of shares. Citadel Investment Group, PDT Partners, and Engineers Gate Manager 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 Skylands Capital allocated the biggest weight to Greenbrier Companies Inc (NYSE:GBX), around 0.54% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.16 percent of its 13F equity portfolio to GBX.

Due to the fact that Greenbrier Companies Inc (NYSE:GBX) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of money managers that elected to cut their full holdings heading into Q4. It’s worth mentioning that  Renaissance Technologies said goodbye to the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $4.1 million in stock. Robert Bishop’s fund, Impala Asset Management, also dumped its stock, about $3.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 4 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to Greenbrier Companies Inc (NYSE:GBX). We will take a look at TechTarget Inc (NASDAQ:TTGT), Owens & Minor, Inc. (NYSE:OMI), Brookdale Senior Living, Inc. (NYSE:BKD), and Cornerstone Building Brands, Inc. (NYSE:CNR). All of these stocks’ market caps resemble GBX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TTGT 14 60057 -2
OMI 16 70459 5
BKD 17 236242 -5
CNR 20 54192 -6
Average 16.75 105238 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $14 million in GBX’s case. Cornerstone Building Brands, Inc. (NYSE:CNR) is the most popular stock in this table. On the other hand TechTarget Inc (NASDAQ:TTGT) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Greenbrier Companies Inc (NYSE:GBX) is even less popular than TTGT. Hedge funds clearly dropped the ball on GBX as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on GBX as the stock returned 32.1% so far in the second quarter and outperformed the market by an even larger margin.

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