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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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 September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Genie Energy Ltd (NYSE:GNE) based on those filings.
Is GNE a good stock to buy now? Genie Energy Ltd (NYSE:GNE) investors should be aware of a decrease in hedge fund interest lately. Genie Energy Ltd (NYSE:GNE) was in 8 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. Our calculations also showed that GNE 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 let's go over the key hedge fund action encompassing Genie Energy Ltd (NYSE:GNE).
How have hedgies been trading Genie Energy Ltd (NYSE:GNE)?
Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the second quarter of 2020. On the other hand, there were a total of 12 hedge funds with a bullish position in GNE a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Genie Energy Ltd (NYSE:GNE), which was worth $6 million at the end of the third quarter. On the second spot was Kahn Brothers which amassed $3.3 million worth of shares. Arrowstreet Capital, Winton Capital Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kahn Brothers allocated the biggest weight to Genie Energy Ltd (NYSE:GNE), around 0.62% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to GNE.
Seeing as Genie Energy Ltd (NYSE:GNE) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of hedgies that decided to sell off their positions entirely last quarter. Interestingly, Israel Englander's Millennium Management cut the largest investment of all the hedgies followed by Insider Monkey, comprising about $0.8 million in stock, and Greg Eisner's Engineers Gate Manager was right behind this move, as the fund cut about $0.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Genie Energy Ltd (NYSE:GNE) but similarly valued. We will take a look at Dyadic International, Inc. (NASDAQ:DYAI), CTO Realty Growth Inc (NYSE:CTO), Concrete Pumping Holdings, Inc. (NASDAQ:BBCP), XOMA Corp (NASDAQ:XOMA), Arcimoto, Inc. (NASDAQ:FUV), Bioceres Crop Solutions Corp. (NYSE:BIOX), and NL Industries, Inc. (NYSE:NL). This group of stocks' market caps resemble GNE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DYAI,4,5392,1 CTO,8,17012,-4 BBCP,7,33602,0 XOMA,9,93108,-3 FUV,1,827,0 BIOX,2,323,-1 NL,2,1052,-1 Average,4.7,21617,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.7 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $12 million in GNE's case. XOMA Corp (NASDAQ:XOMA) is the most popular stock in this table. On the other hand Arcimoto, Inc. (NASDAQ:FUV) is the least popular one with only 1 bullish hedge fund positions. Genie Energy Ltd (NYSE:GNE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GNE is 66.8. 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 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 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately GNE wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GNE were disappointed as the stock returned 4.5% since the end of September (through 12/2) 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.