In this article we are going to use hedge fund sentiment as a tool and determine whether Gibraltar Industries Inc (NASDAQ:ROCK) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Gibraltar Industries Inc (NASDAQ:ROCK) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. Gibraltar Industries Inc (NASDAQ:ROCK) was in 19 hedge funds’ portfolios at the end of September. The all time high for this statistic is 23. There were 14 hedge funds in our database with ROCK positions at the end of the second quarter. 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 for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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 15 best blue chip stocks 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a glance at the new hedge fund action regarding Gibraltar Industries Inc (NASDAQ:ROCK).
Do Hedge Funds Think ROCK Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in ROCK a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the biggest position in Gibraltar Industries Inc (NASDAQ:ROCK). Renaissance Technologies has a $42.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates, with a $24.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Diametric Capital allocated the biggest weight to Gibraltar Industries Inc (NASDAQ:ROCK), around 2.5% of its 13F portfolio. Lyon Street Capital is also relatively very bullish on the stock, dishing out 1.01 percent of its 13F equity portfolio to ROCK.
As aggregate interest increased, some big names were breaking ground themselves. Brant Point Investment Management, managed by Ira Unschuld, initiated the largest position in Gibraltar Industries Inc (NASDAQ:ROCK). Brant Point Investment Management had $5.1 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also initiated a $2.8 million position during the quarter. The other funds with new positions in the stock are Charles Paquelet’s Skylands Capital, David Harding’s Winton Capital Management, and Brian C. Freckmann’s Lyon Street Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Gibraltar Industries Inc (NASDAQ:ROCK). These stocks are Telephone & Data Systems, Inc. (NYSE:TDS), The Simply Good Foods Company (NASDAQ:SMPL), Outfront Media Inc (REIT) (NYSE:OUT), Renewable Energy Group Inc (NASDAQ:REGI), Taro Pharmaceutical Industries Ltd. (NYSE:TARO), ESCO Technologies Inc. (NYSE:ESE), and Upwork Inc. (NASDAQ:UPWK). All of these stocks’ market caps are closest to ROCK’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $214 million. That figure was $135 million in ROCK’s case. Outfront Media Inc (REIT)(NYSE:OUT) is the most popular stock in this table. On the other hand Taro Pharmaceutical Industries Ltd. (NYSE:TARO) is the least popular one with only 9 bullish hedge fund positions. Gibraltar Industries Inc (NASDAQ:ROCK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ROCK is 53.3. 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. This is a slightly negative signal and 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 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately ROCK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ROCK investors were disappointed as the stock returned 6% since the end of September (through 12/14) 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.