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Is GPRE A Good Stock To Buy Now?

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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Green Plains Inc. (NASDAQ:GPRE).

Is GPRE a good stock to buy now? Hedge funds were taking a pessimistic view. The number of bullish hedge fund bets fell by 3 recently. Green Plains Inc. (NASDAQ:GPRE) was in 17 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 27. Our calculations also showed that GPRE 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). There were 20 hedge funds in our database with GPRE holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Nathaniel August - Mangrove Partners
Nathaniel August - Mangrove Partners

Nathaniel August of Mangrove Partners

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. With all of this in mind we're going to go over the latest hedge fund action encompassing Green Plains Inc. (NASDAQ:GPRE).

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

At third quarter's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GPRE over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Mangrove Partners, managed by Nathaniel August, holds the most valuable position in Green Plains Inc. (NASDAQ:GPRE). Mangrove Partners has a $32.8 million position in the stock, comprising 4.1% of its 13F portfolio. The second most bullish fund manager is Encompass Capital Advisors, managed by Todd J. Kantor, which holds a $26.7 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain D. E. Shaw's D E Shaw, David Rosen's Rubric Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Mangrove Partners allocated the biggest weight to Green Plains Inc. (NASDAQ:GPRE), around 4.14% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, earmarking 2.38 percent of its 13F equity portfolio to GPRE.

Judging by the fact that Green Plains Inc. (NASDAQ:GPRE) has experienced a decline in interest from hedge fund managers, it's safe to say that there were a few money managers who sold off their full holdings last quarter. Interestingly, Till Bechtolsheimer's Arosa Capital Management said goodbye to the biggest position of all the hedgies followed by Insider Monkey, comprising an estimated $10.9 million in stock. Ken Griffin's fund, Citadel Investment Group, also said goodbye to its stock, about $6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds last quarter.

Let's go over hedge fund activity in other stocks similar to Green Plains Inc. (NASDAQ:GPRE). We will take a look at Genesis Energy, L.P. (NYSE:GEL), The York Water Company (NASDAQ:YORW), Adecoagro SA (NYSE:AGRO), The Chefs Warehouse, Inc (NASDAQ:CHEF), Fluidigm Corporation (NASDAQ:FLDM), Poseida Therapeutics, Inc. (NASDAQ:PSTX), and trivago N.V. (NASDAQ:TRVG). This group of stocks' market values are closest to GPRE's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GEL,3,6208,-1 YORW,9,16014,1 AGRO,10,141512,-3 CHEF,19,86707,5 FLDM,27,152829,7 PSTX,12,69861,12 TRVG,8,48998,1 Average,12.6,74590,3.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $157 million in GPRE's case. Fluidigm Corporation (NASDAQ:FLDM) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 3 bullish hedge fund positions. Green Plains Inc. (NASDAQ:GPRE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GPRE is 50.1. 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately GPRE wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GPRE were disappointed as the stock returned -11.8% since the end of September (through 12/14) 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.

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