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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Gravity Co., LTD. (NASDAQ:GRVY) based on those filings.
Is Gravity Co., LTD. (NASDAQ:GRVY) worth your attention right now? The best stock pickers are in a bearish mood. The number of bullish hedge fund bets decreased by 1 in recent months. Our calculations also showed that GRVY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a multitude of signals stock traders use to analyze stocks. Two of the best signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outpace the S&P 500 by a solid amount (see the details here).
[caption id="attachment_26255" align="aligncenter" width="399"] Louis Navellier of Navellier & Associates[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the fresh hedge fund action regarding Gravity Co., LTD. (NASDAQ:GRVY).
What does smart money think about Gravity Co., LTD. (NASDAQ:GRVY)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. By comparison, 1 hedge funds held shares or bullish call options in GRVY a year ago. 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 stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the most valuable position in Gravity Co., LTD. (NASDAQ:GRVY), worth close to $1.4 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Navellier & Associates, led by Louis Navellier, holding a $0.4 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism contain John Overdeck and David Siegel's Two Sigma Advisors, Frederick DiSanto's Ancora Advisors and . In terms of the portfolio weights assigned to each position Navellier & Associates allocated the biggest weight to Gravity Co., LTD. (NASDAQ:GRVY), around 0.09% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, designating 0.0038 percent of its 13F equity portfolio to GRVY.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified GRVY as a viable investment and initiated a position in the stock.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Gravity Co., LTD. (NASDAQ:GRVY) but similarly valued. We will take a look at Sierra Wireless, Inc. (NASDAQ:SWIR), Old Second Bancorp Inc. (NASDAQ:OSBC), Noodles & Co (NASDAQ:NDLS), and Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT). All of these stocks' market caps match GRVY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWIR,9,52739,-3 OSBC,11,16347,0 NDLS,14,52490,-2 ARCT,11,10368,0 Average,11.25,32986,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $2 million in GRVY's case. Noodles & Co (NASDAQ:NDLS) is the most popular stock in this table. On the other hand Sierra Wireless, Inc. (NASDAQ:SWIR) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Gravity Co., LTD. (NASDAQ:GRVY) is even less popular than SWIR. Hedge funds clearly dropped the ball on GRVY as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on GRVY as the stock returned 69.2% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.