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Should You Buy Genco Shipping & Trading Limited (GNK)?

Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 30 stock picks outperformed the S&P 500 Index by 4 percentage points through the middle of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

Genco Shipping & Trading Limited (NYSE:GNK) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. GNK was in 23 hedge funds’ portfolios at the end of the third quarter of 2018. There were 19 hedge funds in our database with GNK holdings at the end of the previous quarter. Our calculations also showed that GNK isn’t among the 30 most popular stocks among hedge funds.

To most market participants, hedge funds are viewed as unimportant, old investment vehicles of yesteryear. While there are over 8,000 funds trading at present, We hone in on the upper echelon of this group, approximately 700 funds. These hedge fund managers have their hands on the majority of the smart money’s total capital, and by tailing their finest stock picks, Insider Monkey has deciphered a number of investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by 6 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

MILLENNIUM MANAGEMENT

We’re going to take a peek at the fresh hedge fund action regarding Genco Shipping & Trading Limited (NYSE:GNK).

How are hedge funds trading Genco Shipping & Trading Limited (NYSE:GNK)?

At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in GNK heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

GNK_dec2018

More specifically, Centerbridge Partners was the largest shareholder of Genco Shipping & Trading Limited (NYSE:GNK), with a stake worth $146.8 million reported as of the end of September. Trailing Centerbridge Partners was Strategic Value Partners, which amassed a stake valued at $142.3 million. Millennium Management, Renaissance Technologies, and Marshall Wace LLP 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. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in Genco Shipping & Trading Limited (NYSE:GNK). Marshall Wace LLP had $7.1 million invested in the company at the end of the quarter. Nathaniel August’s Mangrove Partners also initiated a $4.3 million position during the quarter. The other funds with brand new GNK positions are D. E. Shaw’s D E Shaw and Mike Vranos’s Ellington.

Let’s go over hedge fund activity in other stocks similar to Genco Shipping & Trading Limited (NYSE:GNK). These stocks are Foresight Energy LP (NYSE:FELP), Front Yard Residential Corporation (NYSE:RESI), UMH Properties, Inc (NYSE:UMH), and Bojangles’ Inc (NASDAQ:BOJA). All of these stocks’ market caps match GNK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FELP 3 32862 1
RESI 15 38678 5
UMH 9 25544 0
BOJA 14 21199 5
Average 10.25 29571 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $337 million in GNK’s case. Front Yard Residential Corporation (NYSE:RESI) is the most popular stock in this table. On the other hand Foresight Energy LP (NYSE:FELP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Genco Shipping & Trading Limited (NYSE:GNK) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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