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 Greenlane Holdings, Inc. (NASDAQ:GNLN) based on those filings.
Greenlane Holdings, Inc. (NASDAQ:GNLN) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of September. 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 Adamas Pharmaceuticals Inc (NASDAQ:ADMS), Union Bankshares, Inc. (NASDAQ:UNB), and Avalon GloboCare Corp. (NASDAQ:AVCO) to gather more data points. Our calculations also showed that GNLN 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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26575" align="aligncenter" width="471"] Louis Bacon Moore of Moore Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's view the recent hedge fund action regarding Greenlane Holdings, Inc. (NASDAQ:GNLN).
Hedge fund activity in Greenlane Holdings, Inc. (NASDAQ:GNLN)
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GNLN over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Greenlane Holdings, Inc. (NASDAQ:GNLN) was held by Pura Vida Investments, which reported holding $4.1 million worth of stock at the end of September. It was followed by Moore Global Investments with a $3 million position. Other investors bullish on the company included Alyeska Investment Group, Healthcare Value Capital, and Ardsley Partners. In terms of the portfolio weights assigned to each position Pura Vida Investments allocated the biggest weight to Greenlane Holdings, Inc. (NASDAQ:GNLN), around 1.45% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, designating 1.22 percent of its 13F equity portfolio to GNLN.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks similar to Greenlane Holdings, Inc. (NASDAQ:GNLN). We will take a look at Adamas Pharmaceuticals Inc (NASDAQ:ADMS), Union Bankshares, Inc. (NASDAQ:UNB), Avalon GloboCare Corp. (NASDAQ:AVCO), and Twin Disc, Incorporated (NASDAQ:TWIN). This group of stocks' market caps match GNLN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADMS,10,8048,1 UNB,1,663,0 AVCO,2,444,0 TWIN,5,18448,0 Average,4.5,6901,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $10 million in GNLN's case. Adamas Pharmaceuticals Inc (NASDAQ:ADMS) is the most popular stock in this table. On the other hand Union Bankshares, Inc. (NASDAQ:UNB) is the least popular one with only 1 bullish hedge fund positions. Greenlane Holdings, Inc. (NASDAQ:GNLN) is not the most popular stock in this group but hedge fund interest is still above average. 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GNLN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GNLN were disappointed as the stock returned 0% during the fourth quarter (through the end of November) 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.
Disclosure: None. This article was originally published at Insider Monkey.