Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of GAN Limited (NASDAQ:GAN).
Is GAN a good stock to buy now? GAN Limited (NASDAQ:GAN) has seen a decrease in hedge fund interest of late. GAN Limited (NASDAQ:GAN) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. There were 11 hedge funds in our database with GAN positions at the end of the second quarter. Our calculations also showed that GAN isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
If you’d ask most market participants, hedge funds are assumed to be underperforming, outdated investment tools of years past. While there are greater than 8000 funds trading today, Our researchers hone in on the moguls of this group, about 850 funds. Most estimates calculate that this group of people shepherd the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their inimitable picks, Insider Monkey has discovered various investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, 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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. Now we’re going to take a peek at the fresh hedge fund action surrounding GAN Limited (NASDAQ:GAN).
How have hedgies been trading GAN Limited (NASDAQ:GAN)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -36% from the second quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in GAN a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Driehaus Capital held the most valuable stake in GAN Limited (NASDAQ:GAN), which was worth $6.4 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $4.4 million worth of shares. Point72 Asset Management, Citadel Investment Group, and Balyasny Asset 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 Stamina Capital Management allocated the biggest weight to GAN Limited (NASDAQ:GAN), around 0.24% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, setting aside 0.13 percent of its 13F equity portfolio to GAN.
Since GAN Limited (NASDAQ:GAN) has faced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of fund managers that elected to cut their positions entirely last quarter. It’s worth mentioning that Warren Lammert’s Granite Point Capital dumped the largest position of the “upper crust” of funds followed by Insider Monkey, worth about $5.1 million in stock, and Josh Goldberg’s G2 Investment Partners Management was right behind this move, as the fund dumped about $2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as GAN Limited (NASDAQ:GAN) but similarly valued. These stocks are DMC Global Inc. (NASDAQ:BOOM), Northfield Bancorp Inc (NASDAQ:NFBK), US Concrete Inc (NASDAQ:USCR), Homology Medicines, Inc. (NASDAQ:FIXX), CAI International Inc (NYSE:CAI), Plantronics, Inc. (NYSE:PLT), and Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX). All of these stocks’ market caps resemble GAN’s market cap.
|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 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $23 million in GAN’s case. Plantronics, Inc. (NYSE:PLT) is the most popular stock in this table. On the other hand Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) is the least popular one with only 2 bullish hedge fund positions. GAN Limited (NASDAQ:GAN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GAN is 40.9. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately GAN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GAN investors were disappointed as the stock returned -6.3% since the end of September (through 12/2) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.