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. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Green Plains Inc. (NASDAQ:GPRE) based on those filings.
Green Plains Inc. (NASDAQ:GPRE) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds' portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Extraction Oil & Gas, Inc. (NASDAQ:XOG), Global Medical REIT Inc. (NYSE:GMRE), and El Pollo LoCo Holdings Inc (NASDAQ:LOCO) to gather more data points. 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 below for Q2 rankings). Video: Click the image to 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_364880" align="aligncenter" width="823"] Nathaniel August of Mangrove Partners[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's view the key hedge fund action encompassing Green Plains Inc. (NASDAQ:GPRE).
Hedge fund activity in Green Plains Inc. (NASDAQ:GPRE)
At Q3's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GPRE over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Green Plains Inc. (NASDAQ:GPRE) was held by Mangrove Partners, which reported holding $40.5 million worth of stock at the end of September. It was followed by Rubric Capital Management with a $23.8 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Mangrove Partners allocated the biggest weight to Green Plains Inc. (NASDAQ:GPRE), around 4.9% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, setting aside 2.19 percent of its 13F equity portfolio to GPRE.
Judging by the fact that Green Plains Inc. (NASDAQ:GPRE) has faced declining sentiment from the smart money, we can see that there exists a select few funds who sold off their full holdings by the end of the third quarter. Intriguingly, Highbridge Capital Management sold off the biggest stake of the "upper crust" of funds monitored by Insider Monkey, totaling an estimated $3.2 million in stock, and Isaac Corre's Governors Lane was right behind this move, as the fund said goodbye to about $3.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to Green Plains Inc. (NASDAQ:GPRE). We will take a look at Extraction Oil & Gas, Inc. (NASDAQ:XOG), Global Medical REIT Inc. (NYSE:GMRE), El Pollo LoCo Holdings Inc (NASDAQ:LOCO), and Hibbett Sports, Inc. (NASDAQ:HIBB). This group of stocks' market valuations resemble GPRE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XOG,17,57652,0 GMRE,8,15835,-5 LOCO,10,9183,-1 HIBB,14,80882,-1 Average,12.25,40888,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $101 million in GPRE's case. Extraction Oil & Gas, Inc. (NASDAQ:XOG) is the most popular stock in this table. On the other hand Global Medical REIT Inc. (NYSE:GMRE) is the least popular one with only 8 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 calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on GPRE as the stock returned 43.9% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.