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Geospace Technologies Corp (GEOS) Fell Out Of Favor With Hedge Funds

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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Geospace Technologies Corp (NASDAQ:GEOS) based on those filings.

Is Geospace Technologies Corp (NASDAQ:GEOS) a good investment now? The best stock pickers were selling. The number of long hedge fund positions went down by 3 in recent months. Geospace Technologies Corp (NASDAQ:GEOS) was in 5 hedge funds' portfolios at the end of March. The all time high for this statistic is 12. Our calculations also showed that GEOS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 8 hedge funds in our database with GEOS positions at the end of the fourth quarter.

In the financial world there are numerous indicators investors employ to analyze publicly traded companies. A duo of the most underrated indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite investment managers can trounce their index-focused peers by a solid amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

David E. Shaw of D.E. Shaw
David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a gander at the key hedge fund action surrounding Geospace Technologies Corp (NASDAQ:GEOS).

Do Hedge Funds Think GEOS Is A Good Stock To Buy Now?

At first quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GEOS over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Peter Schliemann's Rutabaga Capital Management has the biggest position in Geospace Technologies Corp (NASDAQ:GEOS), worth close to $3.8 million, amounting to 1.7% of its total 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism consist of Renaissance Technologies, D. E. Shaw's D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Geospace Technologies Corp (NASDAQ:GEOS), around 1.73% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.002 percent of its 13F equity portfolio to GEOS.

Judging by the fact that Geospace Technologies Corp (NASDAQ:GEOS) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there exists a select few fund managers that slashed their full holdings in the first quarter. Interestingly, Nick Thakore's Diametric Capital sold off the largest stake of all the hedgies watched by Insider Monkey, comprising close to $0.4 million in stock, and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital) was right behind this move, as the fund sold off about $0.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 3 funds in the first quarter.

Let's now review hedge fund activity in other stocks similar to Geospace Technologies Corp (NASDAQ:GEOS). These stocks are Galectin Therapeutics Inc. (NASDAQ:GALT), Q&K International Group Limited (NASDAQ:QK), Biolase Inc (NASDAQ:BIOL), iMedia Brands, Inc. (NASDAQ:IMBI), Old Point Financial Corporation (NASDAQ:OPOF), First United Corp (NASDAQ:FUNC), and Otonomy Inc (NASDAQ:OTIC). This group of stocks' market values resemble GEOS's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GALT,3,791,-1 QK,1,34,0 BIOL,3,2375,0 IMBI,5,11520,3 OPOF,2,1411,0 FUNC,2,4659,-3 OTIC,16,44505,-4 Average,4.6,9328,-0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.6 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $9 million in GEOS's case. Otonomy Inc (NASDAQ:OTIC) is the most popular stock in this table. On the other hand Q&K International Group Limited (NASDAQ:QK) is the least popular one with only 1 bullish hedge fund positions. Geospace Technologies Corp (NASDAQ:GEOS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GEOS is 27.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately GEOS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GEOS were disappointed as the stock returned -11.4% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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