World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Geopark Limited (NYSE:GPRK) has experienced a decrease in hedge fund interest of late. GPRK was in 10 hedge funds' portfolios at the end of June. There were 13 hedge funds in our database with GPRK holdings at the end of the previous quarter. Our calculations also showed that GPRK isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's check out the fresh hedge fund action encompassing Geopark Limited (NYSE:GPRK).
How are hedge funds trading Geopark Limited (NYSE:GPRK)?
Heading into the third quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the first quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in GPRK a year ago. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Geopark Limited (NYSE:GPRK), with a stake worth $77.5 million reported as of the end of March. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $6.5 million. Millennium Management, Two Sigma Advisors, and Royce & Associates were also very fond of the stock, giving the stock large weights in their portfolios.
Because Geopark Limited (NYSE:GPRK) has experienced a decline in interest from hedge fund managers, logic holds that there exists a select few hedge funds who were dropping their positions entirely in the second quarter. Intriguingly, Paul Tudor Jones's Tudor Investment Corp said goodbye to the largest stake of the 750 funds followed by Insider Monkey, comprising about $0.7 million in stock. David Costen Haley's fund, HBK Investments, also sold off its stock, about $0.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds in the second quarter.
Let's now review hedge fund activity in other stocks similar to Geopark Limited (NYSE:GPRK). We will take a look at Select Energy Services, Inc. (NYSE:WTTR), Criteo SA (NASDAQ:CRTO), Neenah, Inc. (NYSE:NP), and Presidio, Inc. (NASDAQ:PSDO). This group of stocks' market values are closest to GPRK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WTTR,11,41118,-4 CRTO,9,150438,0 NP,7,11350,0 PSDO,19,33607,-6 Average,11.5,59128,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $96 million in GPRK's case. Presidio, Inc. (NASDAQ:PSDO) is the most popular stock in this table. On the other hand Neenah, Inc. (NYSE:NP) is the least popular one with only 7 bullish hedge fund positions. Geopark Limited (NYSE:GPRK) is not the least popular stock in this group but hedge fund interest is still below average. 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GPRK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GPRK investors were disappointed as the stock returned -0.7% during the third quarter 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.