Is GRBK A Good Stock To Buy Now?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Green Brick Partners Inc (NASDAQ:GRBK), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is GRBK a good stock to buy now? The best stock pickers were reducing their bets on the stock. The number of bullish hedge fund bets dropped by 8 recently. Green Brick Partners Inc (NASDAQ:GRBK) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. Our calculations also showed that GRBK 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.

In the eyes of most market participants, hedge funds are perceived as unimportant, outdated investment tools of the past. While there are over 8000 funds with their doors open at present, Our experts choose to focus on the aristocrats of this club, around 850 funds. These investment experts have their hands on the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their first-class stock picks, Insider Monkey has formulated various investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill 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 15 best blue chip stocks 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 we’re going to review the fresh hedge fund action surrounding Green Brick Partners Inc (NASDAQ:GRBK).

Do Hedge Funds Think GRBK Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in GRBK a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GRBK A Good Stock To Buy?

Among these funds, Greenlight Capital held the most valuable stake in Green Brick Partners Inc (NASDAQ:GRBK), which was worth $388.3 million at the end of the third quarter. On the second spot was Diamond Hill Capital which amassed $11.4 million worth of shares. Birch Run Capital, AWH Capital, and AQR Capital Management were 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 Greenlight Capital allocated the biggest weight to Green Brick Partners Inc (NASDAQ:GRBK), around 31.7% of its 13F portfolio. AWH Capital is also relatively very bullish on the stock, earmarking 6.55 percent of its 13F equity portfolio to GRBK.

Because Green Brick Partners Inc (NASDAQ:GRBK) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that slashed their full holdings heading into Q4. It’s worth mentioning that Alexander Medina Seaver’s Stadium Capital Management said goodbye to the biggest investment of the 750 funds monitored by Insider Monkey, valued at an estimated $6.4 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $3.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 8 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Green Brick Partners Inc (NASDAQ:GRBK) but similarly valued. These stocks are United Natural Foods, Inc. (NASDAQ:UNFI), Boot Barn Holdings Inc (NYSE:BOOT), Embraer SA (NYSE:ERJ), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), Alexander & Baldwin Inc (NYSE:ALEX), GreenSky, Inc. (NASDAQ:GSKY), and Associated Capital Group, Inc. (NYSE:AC). This group of stocks’ market caps are closest to GRBK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UNFI 21 59706 0
BOOT 13 33051 0
ERJ 10 40881 -4
MCRI 10 86745 -4
ALEX 15 33459 2
GSKY 12 23357 -1
AC 5 56413 0
Average 12.3 47659 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $422 million in GRBK’s case. United Natural Foods, Inc. (NASDAQ:UNFI) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 5 bullish hedge fund positions. Green Brick Partners Inc (NASDAQ:GRBK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GRBK is 40.6. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on GRBK as the stock returned 35.8% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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