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Hedge Funds Aren’t Crazy About Greenbrier Companies Inc (GBX) Anymore

Nina Todic

Is Greenbrier Companies Inc (NYSE:GBX) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.

Is Greenbrier Companies Inc (NYSE:GBX) the right pick for your portfolio? Hedge funds are selling. The number of bullish hedge fund bets fell by 7 recently. Our calculations also showed that gbx isn't among the 30 most popular stocks among hedge funds. GBX was in 15 hedge funds' portfolios at the end of September. There were 22 hedge funds in our database with GBX positions at the end of the previous quarter.

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 market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

We're going to take a peek at the latest hedge fund action surrounding Greenbrier Companies Inc (NYSE:GBX).

What does the smart money think about Greenbrier Companies Inc (NYSE:GBX)?

At Q3's end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -32% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in GBX at the beginning of this year. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

No of Hedge Funds with GBX Positions

The largest stake in Greenbrier Companies Inc (NYSE:GBX) was held by Royce & Associates, which reported holding $28.9 million worth of stock at the end of September. It was followed by Millennium Management with a $16.2 million position. Other investors bullish on the company included Renaissance Technologies, Arrowgrass Capital Partners, and Scopus Asset Management.

Seeing as Greenbrier Companies Inc (NYSE:GBX) has experienced bearish sentiment from the smart money, we can see that there is a sect of hedge funds that elected to cut their entire stakes in the third quarter. Interestingly, Robert Bishop's Impala Asset Management dropped the largest position of the 700 funds monitored by Insider Monkey, worth about $7.4 million in stock. Daniel S. Och's fund, OZ Management, also cut its stock, about $6.4 million worth. These transactions are interesting, as total hedge fund interest dropped by 7 funds in the third quarter.

Let's now take a look at hedge fund activity in other stocks similar to The Greenbrier Companies, Inc. (NYSE:GBX). These stocks are HNI Corp (NYSE:HNI), International Speedway Corporation (NASDAQ:ISCA), Northwest Natural Holding Company (NYSE:NWN), and Blucora Inc (NASDAQ:BCOR). All of these stocks' market caps match GBX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HNI,10,25685,0 ISCA,17,174152,-2 NWN,9,72010,-1 BCOR,16,191573,-2 Average,13,115855,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $106 million in GBX's case. International Speedway Corporation (NASDAQ:ISCA) is the most popular stock in this table. On the other hand Northwest Natural Holding Company (NYSE:NWN) is the least popular one with only 9 bullish hedge fund positions. The Greenbrier Companies, Inc. (NYSE:GBX) 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. In this regard ISCA might be a better candidate to consider a long position.

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

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