Is Greenlight Capital Re, Ltd. (GLRE) Going to Burn These Hedge Funds?

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 June. At Insider Monkey, we follow nearly 750 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 Greenlight Capital Re, Ltd. (NASDAQ:GLRE), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Greenlight Capital Re, Ltd. (NASDAQ:GLRE) a safe investment right now? The best stock pickers are in an optimistic mood. The number of bullish hedge fund bets improved by 4 in recent months. Our calculations also showed that GLRE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). GLRE was in 12 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with GLRE holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Nathaniel August - Mangrove Partners

Nathaniel August of Mangrove Partners

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a glance at the new hedge fund action regarding Greenlight Capital Re, Ltd. (NASDAQ:GLRE).

Hedge fund activity in Greenlight Capital Re, Ltd. (NASDAQ:GLRE)

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GLRE over the last 17 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is GLRE A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Mangrove Partners, managed by Nathaniel August, holds the most valuable position in Greenlight Capital Re, Ltd. (NASDAQ:GLRE). Mangrove Partners has a $7.1 million position in the stock, comprising 0.9% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions contain Paul Marshall and Ian Wace’s Marshall Wace, Ken Griffin’s Citadel Investment Group and Mark Kleiman’s Factorial Partners. In terms of the portfolio weights assigned to each position Mangrove Partners allocated the biggest weight to Greenlight Capital Re, Ltd. (NASDAQ:GLRE), around 0.85% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, setting aside 0.49 percent of its 13F equity portfolio to GLRE.

Now, key money managers were breaking ground themselves. Marshall Wace, managed by Paul Marshall and Ian Wace, established the most outsized position in Greenlight Capital Re, Ltd. (NASDAQ:GLRE). Marshall Wace had $0.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, John A. Levin’s Levin Capital Strategies, and Bart Baum’s Ionic Capital Management.

Let’s go over hedge fund activity in other stocks similar to Greenlight Capital Re, Ltd. (NASDAQ:GLRE). We will take a look at Unisys Corporation (NYSE:UIS), Collegium Pharmaceutical Inc (NASDAQ:COLL), Genco Shipping & Trading Limited (NYSE:GNK), and Digi International Inc. (NASDAQ:DGII). This group of stocks’ market values are similar to GLRE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UIS 24 43021 8
COLL 13 63291 -3
GNK 11 210512 -1
DGII 12 49465 -1
Average 15 91572 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $12 million in GLRE’s case. Unisys Corporation (NYSE:UIS) is the most popular stock in this table. On the other hand Genco Shipping & Trading Limited (NYSE:GNK) is the least popular one with only 11 bullish hedge fund positions. Greenlight Capital Re, Ltd. (NASDAQ:GLRE) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GLRE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GLRE investors were disappointed as the stock returned -0.6% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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