While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Global Net Lease, Inc. (NYSE:GNL).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the fresh hedge fund action surrounding Global Net Lease, Inc. (NYSE:GNL).
What have hedge funds been doing with Global Net Lease, Inc. (NYSE:GNL)?
Heading into the first quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 133% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards GNL over the last 14 quarters. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Global Net Lease, Inc. (NYSE:GNL), which was worth $21.2 million at the end of the fourth quarter. On the second spot was Balyasny Asset Management which amassed $9.1 million worth of shares. Moreover, GLG Partners, Citadel Investment Group, and Millennium Management were also bullish on Global Net Lease, Inc. (NYSE:GNL), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Global Net Lease, Inc. (NYSE:GNL). Balyasny Asset Management had $9.1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $1.4 million position during the quarter. The other funds with brand new GNL positions are Israel Englander's Millennium Management, Matthew Tewksbury's Stevens Capital Management, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Global Net Lease, Inc. (NYSE:GNL) but similarly valued. We will take a look at The Liberty Braves Group (NASDAQ:BATRK), The E.W. Scripps Company (NASDAQ:SSP), Delphi Technologies PLC (NYSE:DLPH), and Cambrex Corporation (NYSE:CBM). This group of stocks' market values are closest to GNL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BATRK,27,346098,1 SSP,14,168564,2 DLPH,18,171065,-4 CBM,13,33792,-4 Average,18,179880,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $35 million in GNL's case. The Liberty Braves Group (NASDAQ:BATRK) is the most popular stock in this table. On the other hand Cambrex Corporation (NYSE:CBM) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Global Net Lease, Inc. (NYSE:GNL) is even less popular than CBM. Hedge funds dodged a bullet by taking a bearish stance towards GNL. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately GNL wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); GNL investors were disappointed as the stock returned 7.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.