Is Golden Ocean Group Ltd (GOGL) A Good Stock To Buy?

We at Insider Monkey have gone over 700 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 investors think of Golden Ocean Group Ltd (NASDAQ:GOGL).

Golden Ocean Group Ltd (NASDAQ:GOGL) was in 6 hedge funds’ portfolios at the end of September. GOGL investors should be aware of a decrease in enthusiasm from smart money lately. There were 7 hedge funds in our database with GOGL positions at the end of the previous quarter. Our calculations also showed that GOGL isn’t among the 30 most popular stocks among hedge funds.

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 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 market by 18 percentage points since May 2014 through December 3, 2018 (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.

Kerr Neilson

We’re going to check out the fresh hedge fund action encompassing Golden Ocean Group Ltd (NASDAQ:GOGL).

How are hedge funds trading Golden Ocean Group Ltd (NASDAQ:GOGL)?

Heading into the fourth quarter of 2018, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in GOGL at the beginning of this year. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

No of Hedge Funds GOGL Positions

The largest stake in Golden Ocean Group Ltd (NASDAQ:GOGL) was held by Platinum Asset Management, which reported holding $159.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $20.3 million position. Other investors bullish on the company included Marshall Wace LLP, GLG Partners, and Millennium Management.

Since Golden Ocean Group Ltd (NASDAQ:GOGL) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their positions entirely last quarter. At the top of the heap, Louis Navellier’s Navellier & Associates dropped the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $0.7 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund sold off about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Golden Ocean Group Ltd (NASDAQ:GOGL) but similarly valued. We will take a look at ICF International Inc (NASDAQ:ICFI), NGL Energy Partners LP (NYSE:NGL), Summit Hotel Properties Inc (NYSE:INN), and Abercrombie & Fitch Co. (NYSE:ANF). This group of stocks’ market valuations are closest to GOGL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ICFI 16 51615 4
NGL 5 9108 -1
INN 12 22584 2
ANF 20 168236 0
Average 13.25 62886 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $200 million in GOGL’s case. Abercrombie & Fitch Co. (NYSE:ANF) is the most popular stock in this table. On the other hand NGL Energy Partners LP (NYSE:NGL) is the least popular one with only 5 bullish hedge fund positions. Golden Ocean Group Ltd (NASDAQ:GOGL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ANF might be a better candidate to consider a long position.

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