Is Globe Specialty Metals, Inc. (GSM) A Good Stock To Buy?

At Insider Monkey we follow around 730 of the best-performing investors and even though many of them lost money in the last several months, the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

Globe Specialty Metals, Inc. (NASDAQ:GSM) was in 23 hedge funds’ portfolios at the end of September. GSM investors should pay attention to a decrease in support from the world’s most elite money managers of late. There were 27 hedge funds in our database with GSM positions at the end of the previous quarter. At the end of this article we will also compare GSM to other stocks including Astronics Corporation (NASDAQ:ATRO), Advantage Oil & Gas Ltd (USA) (NYSE:AAV), and TPG Specialty Lending Inc (NYSE:TSLX) to get a better sense of its popularity.

Follow Globe Specialty Metals Inc (NASDAQ:GSM)

Now, let’s view the new action encompassing Globe Specialty Metals, Inc. (NASDAQ:GSM).

What does the smart money think about Globe Specialty Metals, Inc. (NASDAQ:GSM)?

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Blue Harbour Group, managed by Clifton S. Robbins, holds the most valuable position in Globe Specialty Metals, Inc. (NASDAQ:GSM). Blue Harbour Group has a $84.9 million position in the stock, comprising 2.6% of its 13F portfolio. The second largest stake is held by Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $28 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism comprise Jay Petschek and Steven Major’s Corsair Capital Management, Israel Englander’s Millennium Management and Peter Schliemann’s Rutabaga Capital Management.

Judging by the fact that Globe Specialty Metals, Inc. (NASDAQ:GSM) has witnessed a declination in interest from hedge fund managers, it’s easy to see that there exists a select few hedgies who were dropping their full holdings in the third quarter. It’s worth mentioning that Joshua Kaufman and Craig Nerenberg’s Brenner West Capital Partners sold off the largest stake of the 700 funds tracked by Insider Monkey, valued at about $10.7 million in stock. Noam Gottesman’s fund, GLG Partners, also dropped its stock, about $1.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Globe Specialty Metals, Inc. (NASDAQ:GSM). We will take a look at Astronics Corporation (NASDAQ:ATRO), Advantage Oil & Gas Ltd (USA) (NYSE:AAV), TPG Specialty Lending Inc (NYSE:TSLX), and Continental Building Products Inc (NYSE:CBPX). This group of stocks’ market caps are similar to GSM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATRO 19 32401 4
AAV 6 6871 -2
TSLX 6 7302 1
CBPX 23 121613 2

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $239 million in GSM’s case. Continental Building Products Inc (NYSE:CBPX) is the most popular stock in this table. On the other hand Advantage Oil & Gas Ltd (USA) (NYSE:AAV) is the least popular one with only 6 bullish hedge fund positions. Along with CBPX, Globe Specialty Metals, Inc. (NASDAQ:GSM) is the most popular stock in this group and that makes it worth a closer look.