We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards GCI Liberty, Inc. (NASDAQ:GLIBA) and determine whether hedge funds skillfully traded this stock.
GCI Liberty, Inc. (NASDAQ:GLIBA) has experienced an increase in activity from the world’s largest hedge funds recently. GCI Liberty, Inc. (NASDAQ:GLIBA) was in 53 hedge funds’ portfolios at the end of June. The all time high for this statistics is 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 49 hedge funds in our database with GLIBA positions at the end of the first quarter. Our calculations also showed that GLIBA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a peek at the fresh hedge fund action encompassing GCI Liberty, Inc. (NASDAQ:GLIBA).
How have hedgies been trading GCI Liberty, Inc. (NASDAQ:GLIBA)?
At Q2’s end, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the first quarter of 2020. On the other hand, there were a total of 38 hedge funds with a bullish position in GLIBA 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.
The largest stake in GCI Liberty, Inc. (NASDAQ:GLIBA) was held by FPR Partners, which reported holding $531.4 million worth of stock at the end of September. It was followed by Eagle Capital Management with a $403.3 million position. Other investors bullish on the company included Hudson Bay Capital Management, D E Shaw, and Foxhaven Asset Management. In terms of the portfolio weights assigned to each position Manor Road Capital Partners allocated the biggest weight to GCI Liberty, Inc. (NASDAQ:GLIBA), around 25.89% of its 13F portfolio. Fort Baker Capital Management is also relatively very bullish on the stock, earmarking 23.14 percent of its 13F equity portfolio to GLIBA.
As one would reasonably expect, some big names have jumped into GCI Liberty, Inc. (NASDAQ:GLIBA) headfirst. Islet Management, managed by Joseph Samuels, initiated the biggest position in GCI Liberty, Inc. (NASDAQ:GLIBA). Islet Management had $6.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $6.1 million position during the quarter. The following funds were also among the new GLIBA investors: George Soros’s Soros Fund Management, Donald Sussman’s Paloma Partners, and Minhua Zhang’s Weld Capital Management.
Let’s go over hedge fund activity in other stocks similar to GCI Liberty, Inc. (NASDAQ:GLIBA). These stocks are Snap-on Incorporated (NYSE:SNA), Trex Company, Inc. (NYSE:TREX), Iron Mountain Incorporated (NYSE:IRM), Textron Inc. (NYSE:TXT), The Scotts Miracle-Gro Company (NYSE:SMG), Molson Coors Beverage Company (NYSE:TAP), and Gaming and Leisure Properties Inc (NASDAQ:GLPI). This group of stocks’ market values resemble GLIBA’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 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $2178 million in GLIBA’s case. Molson Coors Beverage Company (NYSE:TAP) is the most popular stock in this table. On the other hand Snap-on Incorporated (NYSE:SNA) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks GCI Liberty, Inc. (NASDAQ:GLIBA) is more popular among hedge funds. Our overall hedge fund sentiment score for GLIBA is 89. 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 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 33% in 2020 through the end of August and still managed to beat the market by 23.2 percentage points. Hedge funds were also right about betting on GLIBA, though not to the same extent, as the stock returned 13.6% since the end of June and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.