We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like GasLog Ltd (NYSE:GLOG).
GasLog Ltd (NYSE:GLOG) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Southwestern Energy Company (NYSE:SWN), Innovative Industrial Properties, Inc. (NYSE:IIPR), and M/I Homes Inc (NYSE:MHO) to gather more data points. Our calculations also showed that GLOG 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the latest hedge fund action regarding GasLog Ltd (NYSE:GLOG).
How are hedge funds trading GasLog Ltd (NYSE:GLOG)?
Heading into the fourth quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards GLOG over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in GasLog Ltd (NYSE:GLOG), which was worth $17.9 million at the end of the third quarter. On the second spot was Point72 Asset Management which amassed $7.8 million worth of shares. Royce & Associates, GLG Partners, and Millennium Management 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 Southport Management allocated the biggest weight to GasLog Ltd (NYSE:GLOG), around 1.45% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to GLOG.
Seeing as GasLog Ltd (NYSE:GLOG) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedgies who sold off their full holdings last quarter. Intriguingly, Steve Cohen’s Point72 Asset Management sold off the biggest investment of all the hedgies tracked by Insider Monkey, worth close to $1.4 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also sold off its stock, about $0.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as GasLog Ltd (NYSE:GLOG) but similarly valued. We will take a look at Southwestern Energy Company (NYSE:SWN), Innovative Industrial Properties, Inc. (NYSE:IIPR), M/I Homes Inc (NYSE:MHO), and CSW Industrials, Inc. (NASDAQ:CSWI). This group of stocks’ market values are similar to GLOG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SWN | 14 | 144813 | -4 |
| IIPR | 15 | 50763 | 5 |
| MHO | 18 | 63238 | 8 |
| CSWI | 19 | 53910 | 0 |
| Average | 16.5 | 78181 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $44 million in GLOG’s case. CSW Industrials, Inc. (NASDAQ:CSWI) is the most popular stock in this table. On the other hand Southwestern Energy Company (NYSE:SWN) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks GasLog Ltd (NYSE:GLOG) is even less popular than SWN. Hedge funds dodged a bullet by taking a bearish stance towards GLOG. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GLOG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); GLOG investors were disappointed as the stock returned -26% 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
