In this article we will check out the progression of hedge fund sentiment towards Gol Linhas Aereas Inteligentes SA (NYSE:GOL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in Gol Linhas Aereas Inteligentes SA (NYSE:GOL) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that GOL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare GOL to other stocks including AssetMark Financial Holdings, Inc. (NYSE:AMK), Global Net Lease, Inc. (NYSE:GNL), and PAR Technology Corporation (NYSE:PAR) to get a better sense of its popularity.
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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s take a look at the key hedge fund action encompassing Gol Linhas Aereas Inteligentes SA (NYSE:GOL).
Do Hedge Funds Think GOL Is A Good Stock To Buy Now?
At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in GOL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Millennium Management held the most valuable stake in Gol Linhas Aereas Inteligentes SA (NYSE:GOL), which was worth $5.9 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $4.1 million worth of shares. Contrarian Capital, Two Sigma Advisors, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Contrarian Capital allocated the biggest weight to Gol Linhas Aereas Inteligentes SA (NYSE:GOL), around 0.53% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to GOL.
Because Gol Linhas Aereas Inteligentes SA (NYSE:GOL) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedgies who sold off their positions entirely last quarter. Interestingly, Mark Coe’s Intrinsic Edge Capital sold off the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $2.3 million in stock. Sander Gerber’s fund, Hudson Bay Capital Management, also cut its stock, about $1.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Gol Linhas Aereas Inteligentes SA (NYSE:GOL). We will take a look at AssetMark Financial Holdings, Inc. (NYSE:AMK), Global Net Lease, Inc. (NYSE:GNL), PAR Technology Corporation (NYSE:PAR), Eldorado Gold Corp (NYSE:EGO), Great Western Bancorp Inc (NYSE:GWB), CVR Energy, Inc. (NYSE:CVI), and WideOpenWest, Inc. (NYSE:WOW). All of these stocks’ market caps resemble GOL’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMK,9,45274,0 GNL,13,26162,-3 PAR,17,460626,1 EGO,15,142342,-1 GWB,10,13630,-3 CVI,16,1348329,-2 WOW,19,296125,5 Average,14.1,333213,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $333 million. That figure was $21 million in GOL’s case. WideOpenWest, Inc. (NYSE:WOW) is the most popular stock in this table. On the other hand AssetMark Financial Holdings, Inc. (NYSE:AMK) is the least popular one with only 9 bullish hedge fund positions. Gol Linhas Aereas Inteligentes SA (NYSE:GOL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GOL is 28.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately GOL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GOL investors were disappointed as the stock returned -12.8% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.