Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That's why we weren't surprised when hedge funds’ top 20 large-cap stock picks generated a return of 24.4% during the first 9 months of 2019 and outperformed the broader market benchmark by 4 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
The Greenbrier Companies, Inc. (NYSE:GBX) was in 14 hedge funds' portfolios at the end of June. GBX shareholders have witnessed an increase in enthusiasm from smart money recently. There were 11 hedge funds in our database with GBX holdings at the end of the previous quarter. Our calculations also showed that GBX isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are a lot of signals market participants put to use to evaluate publicly traded companies. Some of the most under-the-radar signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best investment managers can outpace the broader indices by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a gander at the fresh hedge fund action surrounding The Greenbrier Companies, Inc. (NYSE:GBX).
What does smart money think about The Greenbrier Companies, Inc. (NYSE:GBX)?
At Q2's end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GBX over the last 16 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Marshall Wace LLP was the largest shareholder of The Greenbrier Companies, Inc. (NYSE:GBX), with a stake worth $3.6 million reported as of the end of March. Trailing Marshall Wace LLP was Arrowgrass Capital Partners, which amassed a stake valued at $2.5 million. Polaris Capital Management, Hawkeye Capital, and Royce & Associates were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers have jumped into The Greenbrier Companies, Inc. (NYSE:GBX) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in The Greenbrier Companies, Inc. (NYSE:GBX). Marshall Wace LLP had $3.6 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $1.9 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, Matthew Tewksbury's Stevens Capital Management, and Michael Gelband's ExodusPoint Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as The Greenbrier Companies, Inc. (NYSE:GBX) but similarly valued. These stocks are Atara Biotherapeutics Inc (NASDAQ:ATRA), OneSpaWorld Holdings Limited (NASDAQ:OSW), Standex International Corporation (NYSE:SXI), and MAG Silver Corp. (NYSE:MAG). This group of stocks' market values match GBX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATRA,12,377753,-3 OSW,11,86464,0 SXI,9,32228,-2 MAG,9,25008,-2 Average,10.25,130363,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $20 million in GBX's case. Atara Biotherapeutics Inc (NASDAQ:ATRA) is the most popular stock in this table. On the other hand Standex International Corporation (NYSE:SXI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks The Greenbrier Companies, Inc. (NYSE:GBX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GBX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GBX were disappointed as the stock returned -0.1% during the third quarter 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 in Q3.
Disclosure: None. This article was originally published at Insider Monkey.