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Is GOL Stock A Buy Now?

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Debasis Saha
·6 min read
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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Gol Linhas Aereas Inteligentes SA (NYSE:GOL).

Is GOL stock a buy now? Hedge fund interest in Gol Linhas Aereas Inteligentes SA (NYSE:GOL) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that GOL 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). At the end of this article we will also compare GOL to other stocks including Central European Media Enterprises Ltd. (NASDAQ:CETV), Community Healthcare Trust Inc (NYSE:CHCT), and Virtus Investment Partners Inc (NASDAQ:VRTS) to get a better sense of its popularity.

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.

David Siegel of Two Sigma Advisors
David Siegel of Two Sigma Advisors

David Siegel of Two Sigma Advisors

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. Now we're going to take a gander at the new hedge fund action surrounding Gol Linhas Aereas Inteligentes SA (NYSE:GOL).

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

At third quarter's end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 11 hedge funds with a bullish position in GOL a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GOL A Good Stock To Buy?
Is GOL A Good Stock To Buy?

More specifically, Citadel Investment Group was the largest shareholder of Gol Linhas Aereas Inteligentes SA (NYSE:GOL), with a stake worth $9.3 million reported as of the end of September. Trailing Citadel Investment Group was Contrarian Capital, which amassed a stake valued at $5.8 million. Two Sigma Advisors, Marshall Wace LLP, and Millennium Management 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 Contrarian Capital allocated the biggest weight to Gol Linhas Aereas Inteligentes SA (NYSE:GOL), around 2.47% of its 13F portfolio. Hudson Bay Capital Management is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to GOL.

Because Gol Linhas Aereas Inteligentes SA (NYSE:GOL) has experienced falling interest from hedge fund managers, logic holds that there lies a certain "tier" of hedgies that elected to cut their entire stakes in the third quarter. Intriguingly, Renaissance Technologies cut the largest position of the 750 funds monitored by Insider Monkey, totaling about $3.1 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund said goodbye to about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks similar to Gol Linhas Aereas Inteligentes SA (NYSE:GOL). These stocks are Central European Media Enterprises Ltd. (NASDAQ:CETV), Community Healthcare Trust Inc (NYSE:CHCT), Virtus Investment Partners Inc (NASDAQ:VRTS), Evolent Health Inc (NYSE:EVH), Quanterix Corporation (NASDAQ:QTRX), Innoviva, Inc. (NASDAQ:INVA), and Lakeland Financial Corporation (NASDAQ:LKFN). This group of stocks' market valuations match GOL's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CETV,13,57180,1 CHCT,10,103503,-5 VRTS,14,69164,4 EVH,20,209259,5 QTRX,10,75933,2 INVA,21,230768,2 LKFN,5,9688,0 Average,13.3,107928,1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $22 million in GOL's case. Innoviva, Inc. (NASDAQ:INVA) is the most popular stock in this table. On the other hand Lakeland Financial Corporation (NASDAQ:LKFN) is the least popular one with only 5 bullish hedge fund positions. Gol Linhas Aereas Inteligentes SA (NYSE:GOL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GOL is 39.4. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on GOL as the stock returned 77.9% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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

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