With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Grand Canyon Education Inc (NASDAQ:LOPE).
Is LOPE a good stock to buy? Grand Canyon Education Inc (NASDAQ:LOPE) has experienced a decrease in enthusiasm from smart money in recent months. Grand Canyon Education Inc (NASDAQ:LOPE) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. Our calculations also showed that LOPE 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Keeping this in mind we’re going to analyze the latest hedge fund action encompassing Grand Canyon Education Inc (NASDAQ:LOPE).
Do Hedge Funds Think LOPE Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LOPE over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Sachem Head Capital, managed by Scott Ferguson, holds the biggest position in Grand Canyon Education Inc (NASDAQ:LOPE). Sachem Head Capital has a $64 million position in the stock, comprising 3.9% of its 13F portfolio. The second most bullish fund is Renaissance Technologies, with a $27.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Alexander Medina Seaver’s Stadium Capital Management and Mark Coe’s Intrinsic Edge Capital. In terms of the portfolio weights assigned to each position Stadium Capital Management allocated the biggest weight to Grand Canyon Education Inc (NASDAQ:LOPE), around 7.41% of its 13F portfolio. Sachem Head Capital is also relatively very bullish on the stock, designating 3.88 percent of its 13F equity portfolio to LOPE.
Seeing as Grand Canyon Education Inc (NASDAQ:LOPE) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds who were dropping their full holdings last quarter. Interestingly, Peter S. Park’s Park West Asset Management dumped the biggest investment of all the hedgies watched by Insider Monkey, totaling close to $22.4 million in stock. Minhua Zhang’s fund, Weld Capital Management, also said goodbye to its stock, about $1.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Grand Canyon Education Inc (NASDAQ:LOPE). We will take a look at World Wrestling Entertainment, Inc. (NYSE:WWE), Carter’s, Inc. (NYSE:CRI), ChemoCentryx Inc (NASDAQ:CCXI), RLI Corp. (NYSE:RLI), Harley-Davidson, Inc. (NYSE:HOG), KB Home (NYSE:KBH), and Switch, Inc. (NYSE:SWCH). All of these stocks’ market caps resemble LOPE’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $364 million. That figure was $194 million in LOPE’s case. Harley-Davidson, Inc. (NYSE:HOG) is the most popular stock in this table. On the other hand RLI Corp. (NYSE:RLI) is the least popular one with only 22 bullish hedge fund positions. Grand Canyon Education Inc (NASDAQ:LOPE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LOPE is 79.4. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on LOPE as the stock returned 17.9% since the end of Q3 (through 12/18) 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.