It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in The GEO Group Inc (NYSE:GEO).
Is The GEO Group Inc (NYSE:GEO) the right investment to pursue these days? The best stock pickers are turning bullish. The number of long hedge fund bets grew by 1 recently. GEO was in 14 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with GEO positions at the end of the previous quarter. At the end of this article we will also compare GEO to other stocks including HSN, Inc. (NASDAQ:HSNI), Acadia Realty Trust (NYSE:AKR), and Belden Inc. (NYSE:BDC) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What does the smart money think about The GEO Group Inc (NYSE:GEO)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, an 8% rise from the second quarter of 2016. By comparison, 13 hedge funds held shares or bullish call options in GEO heading into this year, showing the same moderate gain over the past 3 quarters as during the latest quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Elliott Management, led by Paul Singer, holds the biggest position in The GEO Group Inc (NYSE:GEO). Elliott Management has a $76.7 million position in the stock. The second largest stake is held by Bloom Tree Partners, led by Alok Agrawal, which holds a $38 million position; 2.9% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions consist of Ken Griffin’s Citadel Investment Group, David Einhorn’s Greenlight Capital, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.