World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
GoPro Inc (NASDAQ:GPRO) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of September. At the end of this article we will also compare GPRO to other stocks including Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), LGI Homes Inc (NASDAQ:LGIH), and Live Oak Bancshares Inc (NASDAQ:LOB) to get a better sense of its popularity.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to view the fresh hedge fund action encompassing GoPro Inc (NASDAQ:GPRO).
Hedge fund activity in GoPro Inc (NASDAQ:GPRO)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, representing no change from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in GPRO at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of GoPro Inc (NASDAQ:GPRO), with a stake worth $44.1 million reported as of the end of September. Trailing Renaissance Technologies was Marshall Wace LLP, which amassed a stake valued at $16.7 million. Citadel Investment Group, Millennium Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Since GoPro Inc (NASDAQ:GPRO) has experienced declining sentiment from the smart money, logic holds that there exists a select few funds who sold off their entire stakes heading into Q3. Interestingly, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital dumped the biggest position of the 700 funds tracked by Insider Monkey, valued at about $0.4 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund sold off about $0.2 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to GoPro Inc (NASDAQ:GPRO). These stocks are Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), LGI Homes Inc (NASDAQ:LGIH), Live Oak Bancshares Inc (NASDAQ:LOB), and Renewable Energy Group Inc (NASDAQ:REGI). All of these stocks’ market caps are closest to GPRO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IOVA | 27 | 512208 | 7 |
| LGIH | 12 | 65359 | 2 |
| LOB | 8 | 78368 | -1 |
| REGI | 21 | 82905 | 8 |
| Average | 17 | 184710 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $102 million in GPRO’s case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand Live Oak Bancshares Inc (NASDAQ:LOB) is the least popular one with only 8 bullish hedge fund positions. GoPro Inc (NASDAQ:GPRO) 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 IOVA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
