Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is The Geo Group, Inc. (GEO) A Good Stock To Buy?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards The Geo Group, Inc. (NYSE:GEO).

The Geo Group, Inc. (NYSE:GEO) was in 17 hedge funds’ portfolios at the end of the third quarter of 2018. GEO has experienced an increase in activity from the world’s largest hedge funds in recent months. There were 12 hedge funds in our database with GEO holdings at the end of the previous quarter. Our calculations also showed that GEO isn’t among the 30 most popular stocks among hedge funds.

At the moment there are tons of formulas market participants have at their disposal to size up stocks. Some of the less known formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass their index-focused peers by a very impressive margin (see the details here).

CAPITAL GROWTH MANAGEMENT

We’re going to take a peek at the recent hedge fund action surrounding The Geo Group, Inc. (NYSE:GEO).

How have hedgies been trading The Geo Group, Inc. (NYSE:GEO)?

Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 42% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GEO over the last 13 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

GEO_dec2018

More specifically, Capital Growth Management was the largest shareholder of The Geo Group, Inc. (NYSE:GEO), with a stake worth $39 million reported as of the end of September. Trailing Capital Growth Management was Millennium Management, which amassed a stake valued at $18.8 million. D E Shaw, Two Sigma Advisors, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Capital Growth Management, managed by Ken Heebner, assembled the biggest position in The Geo Group, Inc. (NYSE:GEO). Capital Growth Management had $39 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $4.6 million position during the quarter. The other funds with brand new GEO positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Costen Haley’s HBK Investments, and Mike Vranos’s Ellington.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Geo Group, Inc. (NYSE:GEO) but similarly valued. We will take a look at AVX Corporation (NYSE:AVX), BlackLine, Inc. (NASDAQ:BL), CNX Resources Corporation (NYSE:CNX), and SiteOne Landscape Supply, Inc. (NYSE:SITE). This group of stocks’ market caps match GEO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AVX 16 151569 3
BL 13 274605 -2
CNX 23 950530 0
SITE 15 108915 4
Average 16.75 371405 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $371 million. That figure was $107 million in GEO’s case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand BlackLine, Inc. (NASDAQ:BL) is the least popular one with only 13 bullish hedge fund positions. The Geo Group, Inc. (NYSE:GEO) 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. In this regard CNX might be a better candidate to consider a long position.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...