At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards GFL Environmental Inc. (NYSE:GFL).
Is GFL a good stock to buy now? Prominent investors were buying. The number of long hedge fund positions advanced by 4 lately. GFL Environmental Inc. (NYSE:GFL) was in 20 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GFL 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). There were 16 hedge funds in our database with GFL positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. Now let’s take a peek at the latest hedge fund action encompassing GFL Environmental Inc. (NYSE:GFL).
Do Hedge Funds Think GFL Is A Good Stock To Buy Now?
At third quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in GFL a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Suvretta Capital Management, managed by Aaron Cowen, holds the most valuable position in GFL Environmental Inc. (NYSE:GFL). Suvretta Capital Management has a $93.5 million position in the stock, comprising 1.7% of its 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $57.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish consist of Highbridge Capital Management, Guy Shahar’s DSAM Partners and Adam Wyden’s ADW Capital. In terms of the portfolio weights assigned to each position ADW Capital allocated the biggest weight to GFL Environmental Inc. (NYSE:GFL), around 18.51% of its 13F portfolio. DSAM Partners is also relatively very bullish on the stock, setting aside 9.2 percent of its 13F equity portfolio to GFL.
Now, specific money managers were leading the bulls’ herd. Interval Partners, managed by Gregg Moskowitz, initiated the largest position in GFL Environmental Inc. (NYSE:GFL). Interval Partners had $11.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $4.3 million position during the quarter. The other funds with brand new GFL positions are Jos Shaver’s Electron Capital Partners, Phill Gross and Robert Atchinson’s Adage Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s now take a look at hedge fund activity in other stocks similar to GFL Environmental Inc. (NYSE:GFL). We will take a look at argenx SE (NASDAQ:ARGX), Knight-Swift Transportation Holdings Inc. (NYSE:KNX), The Mosaic Company (NYSE:MOS), Cabot Oil & Gas Corporation (NYSE:COG), Tandem Diabetes Care Inc (NASDAQ:TNDM), Morningstar, Inc. (NASDAQ:MORN), and UGI Corp (NYSE:UGI). All of these stocks’ market caps match GFL’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 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $362 million in GFL’s case. Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is the most popular stock in this table. On the other hand Morningstar, Inc. (NASDAQ:MORN) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks GFL Environmental Inc. (NYSE:GFL) is even less popular than MORN. Our overall hedge fund sentiment score for GFL is 39. 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. Hedge funds clearly dropped the ball on GFL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on GFL as the stock returned 26.9% since Q3 (through December 14th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.