In this article we will take a look at whether hedge funds think Geopark Ltd (NYSE:GPRK) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Geopark Ltd (NYSE:GPRK) a buy right now? Prominent investors were getting less bullish. The number of long hedge fund positions were cut by 1 lately. Geopark Ltd (NYSE:GPRK) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 13. Our calculations also showed that GPRK 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). There were 13 hedge funds in our database with GPRK positions at the end of the second quarter.
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phill Gross Adage Capital Phillip Gross
Phillip Gross of Adage 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 15 best blue chip stocks 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 we're going to take a glance at the recent hedge fund action surrounding Geopark Ltd (NYSE:GPRK).
Do Hedge Funds Think GPRK Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GPRK over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Geopark Ltd (NYSE:GPRK) was held by Renaissance Technologies, which reported holding $31 million worth of stock at the end of September. It was followed by Encompass Capital Advisors with a $11.6 million position. Other investors bullish on the company included Adage Capital Management, D E Shaw, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Encompass Capital Advisors allocated the biggest weight to Geopark Ltd (NYSE:GPRK), around 1.03% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to GPRK.
Since Geopark Ltd (NYSE:GPRK) has faced declining sentiment from hedge fund managers, logic holds that there exists a select few money managers that elected to cut their entire stakes in the third quarter. Interestingly, Minhua Zhang's Weld Capital Management dumped the biggest stake of the 750 funds monitored by Insider Monkey, valued at close to $0.2 million in stock. Michael Gelband's fund, ExodusPoint Capital, also said goodbye to its stock, about $0.2 million worth. These transactions are interesting, as total hedge fund interest dropped by 1 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Geopark Ltd (NYSE:GPRK) but similarly valued. We will take a look at Global Partners LP (NYSE:GLP), Despegar.com, Corp. (NYSE:DESP), Cue Biopharma, Inc. (NASDAQ:CUE), NetSTREIT Corp. (NYSE:NTST), Horizon Bancorp (NASDAQ:HBNC), Vectrus Inc (NYSE:VEC), and Universal Insurance Holdings, Inc. (NYSE:UVE). All of these stocks' market caps are closest to GPRK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GLP,2,5605,0 DESP,17,98334,-1 CUE,15,155293,-3 NTST,10,92763,10 HBNC,12,16845,-2 VEC,17,39968,1 UVE,14,29470,-2 Average,12.4,62611,0.4 [/table]
As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $53 million in GPRK's case. Despegar.com, Corp. (NYSE:DESP) is the most popular stock in this table. On the other hand Global Partners LP (NYSE:GLP) is the least popular one with only 2 bullish hedge fund positions. Geopark Ltd (NYSE:GPRK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GPRK is 65. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on GPRK as the stock returned 40.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
