Is GCI A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Gannett Co., Inc. (NYSE:GCI).

Is GCI a good stock to buy now? Gannett Co., Inc. (NYSE:GCI) investors should pay attention to a decrease in enthusiasm from smart money in recent months. Gannett Co., Inc. (NYSE:GCI) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 22. There were 12 hedge funds in our database with GCI positions at the end of the second quarter. Our calculations also showed that GCI 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.

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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind we’re going to check out the new hedge fund action surrounding Gannett Co., Inc. (NYSE:GCI).

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

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GCI over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeremy Carton and Gilbert Li’s Alta Fundamental Advisers has the number one position in Gannett Co., Inc. (NYSE:GCI), worth close to $8.7 million, accounting for 9.1% of its total 13F portfolio. Sitting at the No. 2 spot is Randall Smith of Alden Global Capital, with a $3.3 million position; 1.2% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions comprise Leon Cooperman’s Omega Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Alta Fundamental Advisers allocated the biggest weight to Gannett Co., Inc. (NYSE:GCI), around 9.15% of its 13F portfolio. Alden Global Capital is also relatively very bullish on the stock, setting aside 1.18 percent of its 13F equity portfolio to GCI.

Because Gannett Co., Inc. (NYSE:GCI) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds who sold off their positions entirely last quarter. It’s worth mentioning that Peter Algert and Kevin Coldiron’s Algert Coldiron Investors cut the biggest position of all the hedgies watched by Insider Monkey, comprising an estimated $0.1 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund dumped about $0 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Gannett Co., Inc. (NYSE:GCI). We will take a look at LCNB Corp. (NASDAQ:LCNB), Stratus Properties Inc. (NASDAQ:STRS), Protara Therapeutics, Inc. (NASDAQ:TARA), Daktronics, Inc. (NASDAQ:DAKT), Titan International Inc (NYSE:TWI), NeuBase Therapeutics, Inc. (NASDAQ:NBSE), and Precision Drilling Corp (NYSE:PDS). This group of stocks’ market values match GCI’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $15 million in GCI’s case. Protara Therapeutics, Inc. (NASDAQ:TARA) is the most popular stock in this table. On the other hand LCNB Corp. (NASDAQ:LCNB) is the least popular one with only 2 bullish hedge fund positions. Gannett Co., Inc. (NYSE:GCI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GCI is 53.6. 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 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on GCI as the stock returned 116.2% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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