Here is What Hedge Funds Think About Genco Shipping & Trading Limited (GNK)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Genco Shipping & Trading Limited (NYSE:GNK).

Genco Shipping & Trading Limited (NYSE:GNK) investors should pay attention to an increase in hedge fund interest of late. Genco Shipping & Trading Limited (NYSE:GNK) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 23. There were 15 hedge funds in our database with GNK holdings at the end of December. Our calculations also showed that GNK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s view the latest hedge fund action encompassing Genco Shipping & Trading Limited (NYSE:GNK).

Do Hedge Funds Think GNK Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 47% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in GNK a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is GNK A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Centerbridge Partners, managed by Mark T. Gallogly, holds the biggest position in Genco Shipping & Trading Limited (NYSE:GNK). Centerbridge Partners has a $82.8 million position in the stock, comprising 7.7% of its 13F portfolio. On Centerbridge Partners’s heels is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $7.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions comprise Paul Marshall and Ian Wace’s Marshall Wace LLP, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Michael Burry’s Scion Asset Management. In terms of the portfolio weights assigned to each position Centerbridge Partners allocated the biggest weight to Genco Shipping & Trading Limited (NYSE:GNK), around 7.7% of its 13F portfolio. Southport Management is also relatively very bullish on the stock, dishing out 0.75 percent of its 13F equity portfolio to GNK.

As industrywide interest jumped, some big names have jumped into Genco Shipping & Trading Limited (NYSE:GNK) headfirst. Scion Asset Management, managed by Michael Burry, established the most valuable position in Genco Shipping & Trading Limited (NYSE:GNK). Scion Asset Management had $3.6 million invested in the company at the end of the quarter. Mark Broach’s Manatuck Hill Partners also made a $1.5 million investment in the stock during the quarter. The following funds were also among the new GNK investors: D. E. Shaw’s D E Shaw, Thomas E. Lynch’s Mill Road Capital Management, and Lee Ainslie’s Maverick Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Genco Shipping & Trading Limited (NYSE:GNK) but similarly valued. These stocks are Metropolitan Bank Holding Corp. (NYSE:MCB), Vishay Precision Group Inc (NYSE:VPG), Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV), Sientra Inc (NASDAQ:SIEN), Concrete Pumping Holdings, Inc. (NASDAQ:BBCP), Barnes & Noble Education Inc (NYSE:BNED), and DASAN Zhone Solutions, Inc. (NASDAQ:DZSI). All of these stocks’ market caps match GNK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MCB 10 91521 2
VPG 15 87977 0
HOFV 6 12745 -1
SIEN 21 90459 6
BBCP 14 60722 4
BNED 16 47123 3
DZSI 12 48970 7
Average 13.4 62788 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $121 million in GNK’s case. Sientra Inc (NASDAQ:SIEN) is the most popular stock in this table. On the other hand Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Genco Shipping & Trading Limited (NYSE:GNK) is more popular among hedge funds. Our overall hedge fund sentiment score for GNK is 88.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 23.8% in 2021 through July 16th but still managed to beat the market by 7.7 percentage points. Hedge funds were also right about betting on GNK as the stock returned 60.6% since the end of March (through 7/16) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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