Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 6 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Gannett Co., Inc. (NYSE:GCI).
Gannett Co., Inc. (NYSE:GCI) was in 16 hedge funds' portfolios at the end of the first quarter of 2019. GCI has experienced a decrease in support from the world's most elite money managers lately. There were 17 hedge funds in our database with GCI positions at the end of the previous quarter. Our calculations also showed that GCI isn't among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
We're going to go over the latest hedge fund action regarding Gannett Co., Inc. (NYSE:GCI).
How are hedge funds trading Gannett Co., Inc. (NYSE:GCI)?
Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the fourth quarter of 2018. On the other hand, there were a total of 16 hedge funds with a bullish position in GCI a year ago. 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 Gannett Co., Inc. (NYSE:GCI) was held by Alden Global Capital, which reported holding $89.7 million worth of stock at the end of March. It was followed by Arrowstreet Capital with a $7.8 million position. Other investors bullish on the company included HG Vora Capital Management, Royce & Associates, and Two Sigma Advisors.
Seeing as Gannett Co., Inc. (NYSE:GCI) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there exists a select few money managers who were dropping their entire stakes in the third quarter. Intriguingly, Noam Gottesman's GLG Partners dumped the biggest position of the "upper crust" of funds watched by Insider Monkey, totaling an estimated $2.7 million in stock. Joel Greenblatt's fund, Gotham Asset Management, also said goodbye to its stock, about $2.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Gannett Co., Inc. (NYSE:GCI). These stocks are ePlus Inc. (NASDAQ:PLUS), James River Group Holdings Ltd (NASDAQ:JRVR), COMSCORE, Inc. (NASDAQ:SCOR), and WillScot Corporation (NASDAQ:WSC). This group of stocks' market valuations resemble GCI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLUS,9,24581,-4 JRVR,12,37500,2 SCOR,14,270009,2 WSC,22,131621,-2 Average,14.25,115928,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $126 million in GCI's case. WillScot Corporation (NASDAQ:WSC) is the most popular stock in this table. On the other hand ePlus Inc. (NASDAQ:PLUS) is the least popular one with only 9 bullish hedge fund positions. Gannett Co., Inc. (NYSE:GCI) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately GCI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GCI were disappointed as the stock returned -20% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.