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Should You Buy Gibraltar Industries Inc (ROCK)?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Gibraltar Industries Inc (NASDAQ:ROCK).

Is Gibraltar Industries Inc (NASDAQ:ROCK) a splendid investment today? Prominent investors are taking a bullish view. The number of long hedge fund positions improved by 8 recently. Our calculations also showed that ROCK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most shareholders, hedge funds are perceived as worthless, old financial tools of years past. While there are greater than 8000 funds with their doors open today, We look at the elite of this club, about 750 funds. These investment experts direct most of the smart money’s total capital, and by observing their best stock picks, Insider Monkey has spotted a few investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the latest hedge fund action encompassing Gibraltar Industries Inc (NASDAQ:ROCK).

Hedge fund activity in Gibraltar Industries Inc (NASDAQ:ROCK)

Heading into the fourth quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 80% from the second quarter of 2019. By comparison, 12 hedge funds held shares or bullish call options in ROCK a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in Gibraltar Industries Inc (NASDAQ:ROCK). Pzena Investment Management has a $37 million position in the stock, comprising 0.2% of its 13F portfolio. On Pzena Investment Management’s heels is Millennium Management, led by Israel Englander, holding a $18 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish encompass Renaissance Technologies, Chuck Royce’s Royce & Associates and Paul Marshall and Ian Wace’s Marshall Wace. In terms of the portfolio weights assigned to each position Pzena Investment Management allocated the biggest weight to Gibraltar Industries Inc (NASDAQ:ROCK), around 0.2% of its 13F portfolio. Ellington is also relatively very bullish on the stock, designating 0.13 percent of its 13F equity portfolio to ROCK.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Marshall Wace, managed by Paul Marshall and Ian Wace, assembled the biggest position in Gibraltar Industries Inc (NASDAQ:ROCK). Marshall Wace had $9.7 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $2.3 million investment in the stock during the quarter. The other funds with brand new ROCK positions are Paul Tudor Jones’s Tudor Investment Corp, Mike Vranos’s Ellington, and Noam Gottesman’s GLG Partners.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Gibraltar Industries Inc (NASDAQ:ROCK) but similarly valued. We will take a look at Denali Therapeutics Inc. (NASDAQ:DNLI), FBL Financial Group, Inc. (NYSE:FFG), TPG RE Finance Trust, Inc. (NYSE:TRTX), and Tootsie Roll Industries, Inc. (NYSE:TR). This group of stocks’ market caps are similar to ROCK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DNLI 7 14082 -2
FFG 8 16754 1
TRTX 10 45884 1
TR 17 92174 4
Average 10.5 42224 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $119 million in ROCK’s case. Tootsie Roll Industries, Inc. (NYSE:TR) is the most popular stock in this table. On the other hand Denali Therapeutics Inc. (NASDAQ:DNLI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Gibraltar Industries Inc (NASDAQ:ROCK) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on ROCK as the stock returned 13.7% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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