Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Gladstone Commercial Corporation (NASDAQ:GOOD)? The smart money sentiment can provide an answer to this question.
Is Gladstone Commercial Corporation (NASDAQ:GOOD) a good stock to buy now? GOOD shareholders have witnessed an increase in hedge fund interest in recent months. Gladstone Commercial Corporation (NASDAQ:GOOD) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 7 hedge funds in our database with GOOD holdings at the end of June. Our calculations also showed that GOOD 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.
To the average investor there are a lot of signals shareholders can use to grade stocks. Two of the less known signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can beat the S&P 500 by a very impressive amount (see the details here).
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. Keeping this in mind we’re going to go over the latest hedge fund action surrounding Gladstone Commercial Corporation (NASDAQ:GOOD).
How are hedge funds trading Gladstone Commercial Corporation (NASDAQ:GOOD)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the second quarter of 2020. By comparison, 6 hedge funds held shares or bullish call options in GOOD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the most valuable position in Gladstone Commercial Corporation (NASDAQ:GOOD). Renaissance Technologies has a $40 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is John Overdeck and David Siegel of Two Sigma Advisors, with a $3.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw and Michael Gelband’s ExodusPoint Capital. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Gladstone Commercial Corporation (NASDAQ:GOOD), around 0.04% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to GOOD.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Tudor Investment Corp, managed by Paul Tudor Jones, initiated the most outsized position in Gladstone Commercial Corporation (NASDAQ:GOOD). Tudor Investment Corp had $0.2 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to Gladstone Commercial Corporation (NASDAQ:GOOD). We will take a look at Eagle Pharmaceuticals Inc (NASDAQ:EGRX), Amneal Pharmaceuticals, Inc. (NYSE:AMRX), Loop Industries, Inc. (NASDAQ:LOOP), Agilysys, Inc. (NASDAQ:AGYS), Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), Nicolet Bankshares Inc. (NASDAQ:NCBS), and Athira Pharma, Inc. (NASDAQ:ATHA). All of these stocks’ market caps are closest to GOOD’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 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $49 million in GOOD’s case. Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is the most popular stock in this table. On the other hand Nicolet Bankshares Inc. (NASDAQ:NCBS) is the least popular one with only 1 bullish hedge fund positions. Gladstone Commercial Corporation (NASDAQ:GOOD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GOOD is 50.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately GOOD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GOOD investors were disappointed as the stock returned 9.5% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.