Is GreenSky, Inc. (GSKY) Going To Burn These Hedge Funds ?

We can judge whether GreenSky, Inc. (NASDAQ:GSKY) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.

GreenSky, Inc. (NASDAQ:GSKY) investors should be aware of an increase in hedge fund interest recently. GSKY was in 20 hedge funds’ portfolios at the end of the second quarter of 2019. There were 15 hedge funds in our database with GSKY positions at the end of the previous quarter. Our calculations also showed that GSKY isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are a lot of methods stock market investors employ to assess their stock investments. A duo of the most innovative methods are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top fund managers can outpace the broader indices by a significant amount (see the details here).

Paul Reeder PAR Capital Management

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to go over the latest hedge fund action surrounding GreenSky, Inc. (NASDAQ:GSKY).

How are hedge funds trading GreenSky, Inc. (NASDAQ:GSKY)?

Heading into the third quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GSKY over the last 16 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

No of Hedge Funds with GSKY Positions

More specifically, D E Shaw was the largest shareholder of GreenSky, Inc. (NASDAQ:GSKY), with a stake worth $15.6 million reported as of the end of March. Trailing D E Shaw was Bloom Tree Partners, which amassed a stake valued at $11.7 million. Point72 Asset Management, PAR Capital Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

Now, key hedge funds were leading the bulls’ herd. Bloom Tree Partners, managed by Alok Agrawal, established the largest position in GreenSky, Inc. (NASDAQ:GSKY). Bloom Tree Partners had $11.7 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $6.4 million investment in the stock during the quarter. The following funds were also among the new GSKY investors: Zachary Miller’s Parian Global Management, Mark Travis’s Intrepid Capital Management, and OZ Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as GreenSky, Inc. (NASDAQ:GSKY) but similarly valued. We will take a look at M.D.C. Holdings, Inc. (NYSE:MDC), ProPetro Holding Corp. (NYSE:PUMP), Cubic Corporation (NYSE:CUB), and Norbord Inc. (NYSE:OSB). All of these stocks’ market caps match GSKY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MDC 17 81899 0
PUMP 24 206397 3
CUB 19 54795 4
OSB 6 13327 -1
Average 16.5 89105 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $89 million in GSKY’s case. ProPetro Holding Corp. (NYSE:PUMP) is the most popular stock in this table. On the other hand Norbord Inc. (NYSE:OSB) is the least popular one with only 6 bullish hedge fund positions. GreenSky, Inc. (NASDAQ:GSKY) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GSKY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GSKY were disappointed as the stock returned -44.3% during the third 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 many of these stocks already outperformed the market so far this year.

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