While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding GCI Liberty, Inc. (NASDAQ:GLIBA).
Is GLIBA a good stock to buy now? GCI Liberty, Inc. (NASDAQ:GLIBA) has experienced a decrease in activity from the world’s largest hedge funds of late. GCI Liberty, Inc. (NASDAQ:GLIBA) was in 48 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 53. Our calculations also showed that GLIBA 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 review the new hedge fund action surrounding GCI Liberty, Inc. (NASDAQ:GLIBA).
Do Hedge Funds Think GLIBA Is A Good Stock To Buy Now?
At Q3’s end, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GLIBA over the last 21 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, FPR Partners, managed by Bob Peck and Andy Raab, holds the most valuable position in GCI Liberty, Inc. (NASDAQ:GLIBA). FPR Partners has a $530.5 million position in the stock, comprising 18.2% of its 13F portfolio. Coming in second is Boykin Curry of Eagle Capital Management, with a $421.8 million position; 1.5% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions encompass Sander Gerber’s Hudson Bay Capital Management, D. E. Shaw’s D E Shaw and Michael Pausic’s Foxhaven Asset Management. In terms of the portfolio weights assigned to each position Manor Road Capital Partners allocated the biggest weight to GCI Liberty, Inc. (NASDAQ:GLIBA), around 28.93% of its 13F portfolio. Tiger Eye Capital is also relatively very bullish on the stock, designating 19.7 percent of its 13F equity portfolio to GLIBA.
Since GCI Liberty, Inc. (NASDAQ:GLIBA) has faced bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedge funds who sold off their full holdings in the third quarter. Intriguingly, Josh Resnick’s Jericho Capital Asset Management cut the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $70.7 million in stock, and Mason Hawkins’s Southeastern Asset Management was right behind this move, as the fund dumped about $37.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 5 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as GCI Liberty, Inc. (NASDAQ:GLIBA) but similarly valued. We will take a look at Camden Property Trust (NYSE:CPT), Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR), CureVac N.V. (NASDAQ:CVAC), Algonquin Power & Utilities Corp. (NYSE:AQN), Vail Resorts, Inc. (NYSE:MTN), The Carlyle Group Inc. (NASDAQ:CG), and Lyft, Inc. (NASDAQ:LYFT). This group of stocks’ market values are closest to GLIBA’s market value.
|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 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $326 million. That figure was $2312 million in GLIBA’s case. Lyft, Inc. (NASDAQ:LYFT) is the most popular stock in this table. On the other hand Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks GCI Liberty, Inc. (NASDAQ:GLIBA) is more popular among hedge funds. Our overall hedge fund sentiment score for GLIBA is 77.2. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on GLIBA as the stock returned 14.8% since the end of September (through 12/8) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.