Is Global Ship Lease, Inc. (GSL) A Good Stock To Buy?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Global Ship Lease, Inc. (NYSE:GSL) based on that data.

Global Ship Lease, Inc. (NYSE:GSL) has seen a decrease in activity from the world’s largest hedge funds lately. Global Ship Lease, Inc. (NYSE:GSL) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 11. There were 4 hedge funds in our database with GSL positions at the end of the second quarter. Our calculations also showed that GSL 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was 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’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.

Jay Petschek - Corsair Capital

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 10 most profitable companies in the world 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 take a glance at the recent hedge fund action regarding Global Ship Lease, Inc. (NYSE:GSL).

Hedge fund activity in Global Ship Lease, Inc. (NYSE:GSL)

At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. By comparison, 11 hedge funds held shares or bullish call options in GSL a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GSL A Good Stock To Buy?

Among these funds, Nokomis Capital held the most valuable stake in Global Ship Lease, Inc. (NYSE:GSL), which was worth $8.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $3.4 million worth of shares. Brigade Capital was 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 Nokomis Capital allocated the biggest weight to Global Ship Lease, Inc. (NYSE:GSL), around 3.93% of its 13F portfolio. Brigade Capital is also relatively very bullish on the stock, dishing out 0.07 percent of its 13F equity portfolio to GSL.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Corsair Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified GSL as a viable investment and initiated a position in the stock.

Let’s now take a look at hedge fund activity in other stocks similar to Global Ship Lease, Inc. (NYSE:GSL). We will take a look at Unity Bancorp, Inc. (NASDAQ:UNTY), The Bank of Princeton (NASDAQ:BPRN), Middlefield Banc Corp. (NASDAQ:MBCN), Capital Product Partners L.P. (NASDAQ:CPLP), Hawthorn Bancshares, Inc. (NASDAQ:HWBK), Energous Corporation (NASDAQ:WATT), and BayCom Corp (NASDAQ:BCML). This group of stocks’ market caps resemble GSL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UNTY 7 15357 2
BPRN 2 8608 0
MBCN 3 11381 0
CPLP 4 975 1
HWBK 1 1330 0
WATT 6 1511 -2
BCML 3 9470 -3
Average 3.7 6947 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.7 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $13 million in GSL’s case. Unity Bancorp, Inc. (NASDAQ:UNTY) is the most popular stock in this table. On the other hand Hawthorn Bancshares, Inc. (NASDAQ:HWBK) is the least popular one with only 1 bullish hedge fund positions. Global Ship Lease, Inc. (NYSE:GSL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GSL is 28.8. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on GSL as the stock returned 32.6% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.