In this article we will take a look at whether hedge funds think Greenhill & Co., Inc. (NYSE:GHL) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is GHL a good stock to buy now? Greenhill & Co., Inc. (NYSE:GHL) was in 9 hedge funds’ portfolios at the end of September. The all time high for this statistics is 17. GHL investors should pay attention to a decrease in hedge fund sentiment recently. There were 13 hedge funds in our database with GHL positions at the end of the second quarter. Our calculations also showed that GHL 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.
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. With all of this in mind let’s take a look at the key hedge fund action regarding Greenhill & Co., Inc. (NYSE:GHL).
Do Hedge Funds Think GHL Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GHL over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Greenhill & Co., Inc. (NYSE:GHL), with a stake worth $5.4 million reported as of the end of September. Trailing Fisher Asset Management was Rutabaga Capital Management, which amassed a stake valued at $4.3 million. D E Shaw, Arrowstreet Capital, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Greenhill & Co., Inc. (NYSE:GHL), around 2.44% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to GHL.
Judging by the fact that Greenhill & Co., Inc. (NYSE:GHL) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few hedge funds that slashed their positions entirely by the end of the third quarter. Interestingly, David Harding’s Winton Capital Management cut the largest position of all the hedgies tracked by Insider Monkey, comprising an estimated $0.7 million in stock, and Parvinder Thiara’s Athanor Capital was right behind this move, as the fund dropped about $0.6 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Greenhill & Co., Inc. (NYSE:GHL) but similarly valued. We will take a look at Pure Cycle Corporation (NASDAQ:PCYO), Hersha Hospitality Trust (NYSE:HT), LogicBio Therapeutics, Inc. (NASDAQ:LOGC), Fathom Holdings Inc. (NASDAQ:FTHM), Haynes International, Inc. (NASDAQ:HAYN), Alico, Inc. (NASDAQ:ALCO), and PennantPark Investment Corp. (NASDAQ:PNNT). This group of stocks’ market caps match GHL’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 8.1 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $15 million in GHL’s case. Haynes International, Inc. (NASDAQ:HAYN) is the most popular stock in this table. On the other hand Fathom Holdings Inc. (NASDAQ:FTHM) is the least popular one with only 3 bullish hedge fund positions. Greenhill & Co., Inc. (NYSE:GHL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GHL is 44.2. 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 GHL as the stock returned 22.8% 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.