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Is Ferroglobe PLC (GSM) A Good Stock To Buy?

The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Ferroglobe PLC (NASDAQ:GSM) based on those filings.

Ferroglobe PLC (NASDAQ:GSM) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 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 ImmunoGen, Inc. (NASDAQ:IMGN), Sibanye Gold Ltd (NYSE:SBGL), and Unit Corporation (NYSE:UNT) to gather more data points.

Today there are plenty of tools stock traders have at their disposal to size up publicly traded companies. Some of the most under-the-radar tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the S&P 500 by a healthy amount (see the details here).

Phill Gross, Adage Capital Management

We’re going to go over the latest hedge fund action surrounding Ferroglobe PLC (NASDAQ:GSM).

What does the smart money think about Ferroglobe PLC (NASDAQ:GSM)?

Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in GSM heading into this year. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

GSM_dec2018

Among these funds, Adage Capital Management held the most valuable stake in Ferroglobe PLC (NASDAQ:GSM), which was worth $86.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $41.7 million worth of shares. Moreover, D E Shaw, Park West Asset Management, and Ardsley Partners were also bullish on Ferroglobe PLC (NASDAQ:GSM), allocating a large percentage of their portfolios to this stock.

Because Ferroglobe PLC (NASDAQ:GSM) has faced declining sentiment from hedge fund managers, it’s safe to say that there were a few hedgies that decided to sell off their positions entirely by the end of the third quarter. Interestingly, Alex Snow’s Lansdowne Partners dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, worth close to $4.3 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also said goodbye to its stock, about $3.8 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Ferroglobe PLC (NASDAQ:GSM). We will take a look at ImmunoGen, Inc. (NASDAQ:IMGN), Sibanye Gold Ltd (NYSE:SBGL), Unit Corporation (NYSE:UNT), and Asbury Automotive Group, Inc. (NYSE:ABG). This group of stocks’ market caps are similar to GSM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IMGN 18 288017 5
SBGL 12 8798 2
UNT 10 22052 -1
ABG 17 212556 2
Average 14.25 132856 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $165 million in GSM’s case. ImmunoGen, Inc. (NASDAQ:IMGN) is the most popular stock in this table. On the other hand Unit Corporation (NYSE:UNT) is the least popular one with only 10 bullish hedge fund positions. Ferroglobe PLC (NASDAQ:GSM) 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. In this regard IMGN might be a better candidate to consider a long position.

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

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