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Were Hedge Funds Right About Gibraltar Industries Inc (ROCK)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Gibraltar Industries Inc (NASDAQ:ROCK).

Gibraltar Industries Inc (NASDAQ:ROCK) has seen an increase in support from the world’s most elite money managers recently. Our calculations also showed that ROCK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

At the moment there are a large number of indicators shareholders employ to value publicly traded companies. A couple of the less utilized indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outperform the S&P 500 by a very impressive margin (see the details here).

Richard Driehaus of Driehaus Capital

We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the new hedge fund action surrounding Gibraltar Industries Inc (NASDAQ:ROCK).

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

Heading into the first quarter of 2020, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ROCK over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Gibraltar Industries Inc (NASDAQ:ROCK) was held by Renaissance Technologies, which reported holding $30.7 million worth of stock at the end of September. It was followed by Millennium Management with a $22.7 million position. Other investors bullish on the company included D E Shaw, Driehaus Capital, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Driehaus Capital allocated the biggest weight to Gibraltar Industries Inc (NASDAQ:ROCK), around 0.34% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to ROCK.

Now, key money managers have jumped into Gibraltar Industries Inc (NASDAQ:ROCK) headfirst. Winton Capital Management, managed by David Harding, initiated the most valuable position in Gibraltar Industries Inc (NASDAQ:ROCK). Winton Capital Management had $3.1 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $1.3 million investment in the stock during the quarter. The other funds with brand new ROCK positions are Minhua Zhang’s Weld Capital Management, Donald Sussman’s Paloma Partners, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s now take a look at hedge fund activity in other stocks similar to Gibraltar Industries Inc (NASDAQ:ROCK). We will take a look at Esperion Therapeutics (NASDAQ:ESPR), Provident Financial Services, Inc. (NYSE:PFS), Zuora, Inc. (NYSE:ZUO), and LGI Homes Inc (NASDAQ:LGIH). All of these 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
ESPR 15 210894 -1
PFS 16 60229 4
ZUO 26 160649 0
LGIH 13 66254 -2
Average 17.5 124507 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $148 million in ROCK’s case. Zuora, Inc. (NYSE:ZUO) is the most popular stock in this table. On the other hand LGI Homes Inc (NASDAQ:LGIH) is the least popular one with only 13 bullish hedge fund positions. Gibraltar Industries Inc (NASDAQ:ROCK) 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. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately ROCK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ROCK were disappointed as the stock returned -17.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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