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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Geospace Technologies Corp (NASDAQ:GEOS).
Is Geospace Technologies Corp (NASDAQ:GEOS) undervalued? The best stock pickers were in a bearish mood. The number of long hedge fund positions fell by 4 recently. Geospace Technologies Corp (NASDAQ:GEOS) was in 4 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. Our calculations also showed that GEOS isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Gavin Saitowitz of Prelude Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's take a glance at the key hedge fund action surrounding Geospace Technologies Corp (NASDAQ:GEOS).
What have hedge funds been doing with Geospace Technologies Corp (NASDAQ:GEOS)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -50% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in GEOS over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Rutabaga Capital Management, managed by Peter Schliemann, holds the largest position in Geospace Technologies Corp (NASDAQ:GEOS). Rutabaga Capital Management has a $2.5 million position in the stock, comprising 1.4% of its 13F portfolio. The second most bullish fund is Renaissance Technologies, which holds a $0.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Peter Muller's PDT Partners, Gavin Saitowitz and Cisco J. del Valle's Springbok Capital and . In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Geospace Technologies Corp (NASDAQ:GEOS), around 1.45% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.0041 percent of its 13F equity portfolio to GEOS.
Because Geospace Technologies Corp (NASDAQ:GEOS) has witnessed a decline in interest from the smart money, it's safe to say that there exists a select few money managers that slashed their positions entirely by the end of the third quarter. Interestingly, Donald Sussman's Paloma Partners sold off the biggest investment of all the hedgies watched by Insider Monkey, valued at about $0.2 million in stock. Ken Griffin's fund, Citadel Investment Group, also dumped its stock, about $0.2 million worth. These transactions are important to note, as total hedge fund interest fell by 4 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Geospace Technologies Corp (NASDAQ:GEOS) but similarly valued. We will take a look at Limbach Holdings, Inc. (NASDAQ:LMB), Gulfport Energy Corporation (NASDAQ:GPOR), RigNet Inc (NASDAQ:RNET), Marlin Business Services Corp. (NASDAQ:MRLN), X Financial (NYSE:XYF), RYB Education, Inc. (NYSE:RYB), and Braemar Hotels & Resorts Inc. (NYSE:BHR). This group of stocks' market values match GEOS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LMB,4,2446,3 GPOR,10,21369,-6 RNET,6,7476,0 MRLN,5,31525,1 XYF,3,318,1 RYB,3,5548,0 BHR,14,18067,-3 Average,6.4,12393,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $3 million in GEOS's case. Braemar Hotels & Resorts Inc. (NYSE:BHR) is the most popular stock in this table. On the other hand X Financial (NYSE:XYF) is the least popular one with only 3 bullish hedge fund positions. Geospace Technologies Corp (NASDAQ:GEOS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GEOS is 15.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately GEOS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GEOS investors were disappointed as the stock returned 2.4% since the end of September (through 11/27) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.