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Is GATX Corporation (GATX) A Good Stock To Buy?

Before we spend many hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of GATX Corporation (NYSE:GATX).

Is GATX Corporation (NYSE:GATX) going to take off soon? Prominent investors are in an optimistic mood. The number of bullish hedge fund positions rose by 1 lately. Our calculations also showed that GATX isn’t among the 30 most popular stocks among hedge funds.

In the eyes of most market participants, hedge funds are perceived as underperforming, outdated financial vehicles of the past. While there are over 8,000 funds trading at the moment, We look at the top tier of this group, approximately 700 funds. These investment experts control bulk of the smart money’s total capital, and by watching their matchless stock picks, Insider Monkey has figured out various investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by 6 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

D. E. Shaw

We’re going to take a look at the fresh hedge fund action surrounding GATX Corporation (NYSE:GATX).

How have hedgies been trading GATX Corporation (NYSE:GATX)?

Heading into the fourth quarter of 2018, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the second quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in GATX heading into this year. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

GATX_dec2018

Among these funds, GAMCO Investors held the most valuable stake in GATX Corporation (NYSE:GATX), which was worth $207.4 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $37.6 million worth of shares. Moreover, Citadel Investment Group, Scopus Asset Management, and D E Shaw were also bullish on GATX Corporation (NYSE:GATX), allocating a large percentage of their portfolios to this stock.

Consequently, key hedge funds were leading the bulls’ herd. Scopus Asset Management, managed by Alexander Mitchell, established the biggest position in GATX Corporation (NYSE:GATX). Scopus Asset Management had $5.2 million invested in the company at the end of the quarter. Guy Shahar’s DSAM Partners also made a $1.3 million investment in the stock during the quarter. The only other fund with a brand new GATX position is Jim Simons’s Renaissance Technologies.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as GATX Corporation (NYSE:GATX) but similarly valued. These stocks are Hillenbrand, Inc. (NYSE:HI), Horizon Pharma Public Limited Company (NASDAQ:HZNP), Myriad Genetics, Inc. (NASDAQ:MYGN), and Sodastream International Ltd (NASDAQ:SODA). All of these stocks’ market caps match GATX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HI 20 73045 2
HZNP 21 875303 2
MYGN 21 379120 4
SODA 24 827744 8
Average 21.5 538803 4

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $539 million. That figure was $268 million in GATX’s case. Sodastream International Ltd (NASDAQ:SODA) is the most popular stock in this table. On the other hand Hillenbrand, Inc. (NYSE:HI) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks GATX Corporation (NYSE:GATX) is even less popular than HI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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

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