The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Genesee & Wyoming Inc (NYSE:GWR) and see how it was affected.
Genesee & Wyoming Inc (NYSE:GWR) shareholders have witnessed a decrease in hedge fund sentiment recently. GWR was in 20 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with GWR holdings at the end of the previous quarter. At the end of this article we will also compare GWR to other stocks, including SLM Corp (NASDAQ:SLM), Equity One, Inc. (NYSE:EQY), and Western Alliance Bancorporation (NYSE:WAL) to get a better sense of its popularity.
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With all of this in mind, let’s take a glance at the key action encompassing Genesee & Wyoming Inc (NYSE:GWR).
How are hedge funds trading Genesee & Wyoming Inc (NYSE:GWR)?
At the Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the second quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Steve Cohen’s Point72 Asset Management has the number one position in Genesee & Wyoming Inc (NYSE:GWR), worth close to $52.5 million, corresponding to 0.4% of its total 13F portfolio. Coming in second is Goodnow Investment Group, led by Edward Goodnow, holding a $34.5 million position; the fund has 6.6% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain Israel Englander’s Millennium Management, Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management and Ken Griffin’s Citadel Investment Group.
Since Genesee & Wyoming Inc (NYSE:GWR) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds that decided to sell off their full holdings in the third quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management said goodbye to the biggest investment of the 700 funds tracked by Insider Monkey, valued at an estimated $29 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund cut about $27.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Genesee & Wyoming Inc (NYSE:GWR). These stocks are SLM Corp (NASDAQ:SLM), Equity One, Inc. (NYSE:EQY), Western Alliance Bancorporation (NYSE:WAL), and Silgan Holdings Inc. (NASDAQ:SLGN). All of these stocks’ market caps resemble GWR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SLM | 20 | 161207 | -6 |
| EQY | 17 | 115121 | 5 |
| WAL | 28 | 321611 | 2 |
| SLGN | 9 | 66198 | -3 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $287 million in GWR’s case. Western Alliance Bancorporation (NYSE:WAL) is the most popular stock in this table. On the other hand Silgan Holdings Inc. (NASDAQ:SLGN) is the least popular one with only 9 bullish hedge fund positions. Genesee & Wyoming Inc (NYSE:GWR) 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 WAL might be a better candidate to consider a long position.
