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Here’s What Hedge Funds Think About Greenhill & Co., Inc. (GHL)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 15 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated a return of 19.7% during the first 2.5 months of 2019 (vs. 13.1% gain for SPY), with 93% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Greenhill & Co., Inc. (NYSE:GHL).

Greenhill & Co., Inc. (NYSE:GHL) has seen an increase in hedge fund interest of late. GHL was in 13 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 10 hedge funds in our database with GHL holdings at the end of the previous quarter. Our calculations also showed that ghl isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ken Fisher FISHER ASSET MANAGEMENT

We’re going to take a glance at the new hedge fund action regarding Greenhill & Co., Inc. (NYSE:GHL).

How are hedge funds trading Greenhill & Co., Inc. (NYSE:GHL)?

At the end of the fourth quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in GHL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with GHL Positions

When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Greenhill & Co., Inc. (NYSE:GHL). Fisher Asset Management has a $15.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Ancora Advisors, led by Frederick DiSanto, holding a $9.2 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Peter Schliemann’s Rutabaga Capital Management, Israel Englander’s Millennium Management and Mark Travis’s Intrepid Capital Management.

As aggregate interest increased, specific money managers have jumped into Greenhill & Co., Inc. (NYSE:GHL) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in Greenhill & Co., Inc. (NYSE:GHL). Citadel Investment Group had $2.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $1.1 million position during the quarter. The other funds with brand new GHL positions are Mike Vranos’s Ellington, Paul Tudor Jones’s Tudor Investment Corp, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s check out hedge fund activity in other stocks similar to Greenhill & Co., Inc. (NYSE:GHL). These stocks are First Defiance Financial Corp. (NASDAQ:FDEF), Independent Bank Corporation (NASDAQ:IBCP), RadNet Inc. (NASDAQ:RDNT), and Ascena Retail Group Inc (NASDAQ:ASNA). All of these stocks’ market caps are closest to GHL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FDEF 7 28181 -1
IBCP 11 50167 1
RDNT 14 72131 3
ASNA 16 78044 -5
Average 12 57131 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $52 million in GHL’s case. Ascena Retail Group Inc (NASDAQ:ASNA) is the most popular stock in this table. On the other hand First Defiance Financial Corp. (NASDAQ:FDEF) is the least popular one with only 7 bullish hedge fund positions. Greenhill & Co., Inc. (NYSE:GHL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately GHL wasn’t nearly as popular as these 15 stock and hedge funds that were betting on GHL were disappointed as the stock returned -2.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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