Does STG Group Inc (OTCMKTS:GDEF) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Is STG Group Inc (OTCMKTS:GDEF) a worthy investment now? Prominent investors are reducing their bets on the stock. The number of long hedge fund bets has been cut by 1 recently. At the end of this article we will also compare GDEF to other stocks, including GSI Technology, Inc. (NASDAQ:GSIT) and Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) to get a better sense of its popularity.
Follow Stg Group Inc. (NASDAQ:STGG)
Follow Stg Group Inc. (NASDAQ:STGG)
At the moment there are tons of formulas stock market investors put to use to grade their holdings. Two of the best formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the best money managers can outperform the broader indices by a superb amount (see the details here).
Keeping this in mind, we’re going to take a look at the key action surrounding STG Group Inc (OTCMKTS:GDEF).
How are hedge funds trading STG Group Inc (OTCMKTS:GDEF)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 14% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Glazer Capital, managed by Paul Glazer, holds the most valuable position in STG Group Inc (OTCMKTS:GDEF). Glazer Capital has a $7 million position in the stock, comprising 0.9% of its 13F portfolio. On Glazer Capital’s heels is Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, with a $5.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include Sander Gerber’s Hudson Bay Capital Management, Louis Bacon’s Moore Global Investments and Israel Englander’s Millennium Management.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Bulldog Investors. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified GDEF as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks similar to STG Group Inc (OTCMKTS:GDEF). These stocks are GSI Technology, Inc. (NASDAQ:GSIT), Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), and Diana Containerships Inc (NASDAQ:DCIX). This group of stocks’ market caps are closest to GDEF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GSIT | 5 | 8911 | -1 |
| AUPH | 4 | 9585 | -1 |
| DCIX | 4 | 25695 | -3 |
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $22 million in GDEF’s case. STG Group Inc (OTCMKTS:GDEF)registers a hedge fund interest above the average, which we view as a slightly positive signal, which suggests that GDEF may be an interesting stock to take a closer look at.
