At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Gencor Industries, Inc. (NASDAQ:GENC) makes for a good investment right now.
Hedge fund interest in Gencor Industries, Inc. (NASDAQ:GENC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that GENC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Five Star Senior Living Inc. (NYSE:FVE), Timkensteel Corp (NYSE:TMST), and Electrameccanica Vehicles Corp. (NASDAQ:SOLO) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a look at the fresh hedge fund action regarding Gencor Industries, Inc. (NASDAQ:GENC).
What have hedge funds been doing with Gencor Industries, Inc. (NASDAQ:GENC)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in GENC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Gencor Industries, Inc. (NASDAQ:GENC), worth close to $16 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Renaissance Technologies, holding a $5.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Mario Gabelli’s GAMCO Investors, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) and . In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Gencor Industries, Inc. (NASDAQ:GENC), around 0.17% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to GENC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Harvey Partners. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Prelude Capital (previously Springbok Capital)).
Let’s go over hedge fund activity in other stocks similar to Gencor Industries, Inc. (NASDAQ:GENC). These stocks are Five Star Senior Living Inc. (NYSE:FVE), Timkensteel Corp (NYSE:TMST), Electrameccanica Vehicles Corp. (NASDAQ:SOLO), Weyco Group, Inc. (NASDAQ:WEYS), Aptinyx Inc. (NASDAQ:APTX), Premier Financial Bancorp, Inc. (NASDAQ:PFBI), and CTI Biopharma Corp. (NASDAQ:CTIC). This group of stocks’ market values are closest to GENC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.9 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $22 million in GENC’s case. Timkensteel Corp (NYSE:TMST) is the most popular stock in this table. On the other hand Electrameccanica Vehicles Corp. (NASDAQ:SOLO) is the least popular one with only 3 bullish hedge fund positions. Gencor Industries, Inc. (NASDAQ:GENC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GENC is 30.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on GENC as the stock returned 10.2% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.