Where Do Hedge Funds Stand On Gulf Island Fabrication, Inc. (GIFI)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Gulf Island Fabrication, Inc. (NASDAQ:GIFI) to find out whether there were any major changes in hedge funds’ views.

Gulf Island Fabrication, Inc. (NASDAQ:GIFI) has seen a decrease in hedge fund interest of late. Gulf Island Fabrication, Inc. (NASDAQ:GIFI) was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. Our calculations also showed that GIFI 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.

In today’s marketplace there are numerous tools investors have at their disposal to grade stocks. Some of the most under-the-radar tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best money managers can outpace the S&P 500 by a solid amount (see the details here).

John Rogers Ariel Investments

John Rogers of Ariel Investments

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. With all of this in mind we’re going to take a look at the key hedge fund action regarding Gulf Island Fabrication, Inc. (NASDAQ:GIFI).

Hedge fund activity in Gulf Island Fabrication, Inc. (NASDAQ:GIFI)

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in GIFI a year ago. 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 Gulf Island Fabrication, Inc. (NASDAQ:GIFI) was held by Solas Capital Management, which reported holding $2.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $2 million position. Other investors bullish on the company included Millennium Management, Prescott Group Capital Management, and Ariel Investments. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to Gulf Island Fabrication, Inc. (NASDAQ:GIFI), around 2.25% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, designating 0.21 percent of its 13F equity portfolio to GIFI.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. 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 none of the 750+ hedge funds tracked by Insider Monkey identified GIFI as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Gulf Island Fabrication, Inc. (NASDAQ:GIFI) but similarly valued. These stocks are Hallmark Financial Services, Inc. (NASDAQ:HALL), LSB Industries, Inc. (NYSE:LXU), First Seacoast Bancorp (NASDAQ:FSEA), ECMOHO Limited (NASDAQ:MOHO), inTEST Corporation (NYSE:INTT), SilverBow Resorces, Inc. (NYSE:SBOW), and SCYNEXIS Inc (NASDAQ:SCYX). This group of stocks’ market caps are closest to GIFI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HALL 7 2053 -3
LXU 7 4494 -3
FSEA 2 208 0
MOHO 1 134 0
INTT 3 5510 -1
SBOW 6 19383 -1
SCYX 3 2731 -4
Average 4.1 4930 -1.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $6 million in GIFI’s case. Hallmark Financial Services, Inc. (NASDAQ:HALL) is the most popular stock in this table. On the other hand ECMOHO Limited (NASDAQ:MOHO) is the least popular one with only 1 bullish hedge fund positions. Gulf Island Fabrication, Inc. (NASDAQ:GIFI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GIFI is 59.5. 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 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 percentage points. These stocks gained 30.7% in 2020 through November 27th and beat the market again by 16.1 percentage points. Unfortunately GIFI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GIFI were disappointed as the stock returned 1.3% since the end of September (through 11/27) 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.

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