Granite Construction Inc. (GVA): Hedge Funds Are Bearish and Insiders Are Undecided, What Should You Do?
Is it smart to be bullish on Granite Construction Inc. (NYSE:GVA)?
In the eyes of many traders, hedge funds are assumed to be bloated, old investment vehicles of a forgotten age. Although there are more than 8,000 hedge funds in operation today, Insider Monkey aim at the leaders of this club, around 525 funds. Analysts calculate that this group oversees the lion's share of the hedge fund industry's total assets, and by tracking their highest quality picks, we've found a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as necessary, positive insider trading sentiment is a second way to analyze the financial markets. There are a variety of reasons for an executive to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this strategy if shareholders understand what to do (learn more here).
What's more, we're going to examine the latest info about Granite Construction Inc. (NYSE:GVA).
How have hedgies been trading Granite Construction Inc. (NYSE:GVA)?
In preparation for the third quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of -33% from the first quarter. With the smart money's capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes meaningfully.
According to our 13F database, Chuck Royce's Royce & Associates had the largest position in Granite Construction Inc. (NYSE:GVA), worth close to $6.1 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which held a $5.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Jim Simons's Renaissance Technologies, Cliff Asness's AQR Capital Management and Joel Greenblatt's Gotham Asset Management.
Since Granite Construction Inc. (NYSE:GVA) has experienced a fall in interest from upper-tier hedge fund managers, logic holds that there was a specific group of fund managers that slashed their entire stakes heading into Q2. It's worth mentioning that Donald Chiboucis's Columbus Circle Investors dropped the biggest position of the 450+ funds we monitor, totaling about $17.3 million in stock, and Andrew Sandler of Sandler Capital Management was right behind this move, as the fund sold off about $8.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 6 funds heading into Q2.
What do corporate executives and insiders think about Granite Construction Inc. (NYSE:GVA)?
Bullish insider trading is best served when the company in question has experienced transactions within the past 180 days. Over the latest 180-day time period, Granite Construction Inc. (NYSE:GVA) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also take a look at the relationship between both of these indicators in other stocks similar to Granite Construction Inc. (NYSE:GVA). These stocks are MasTec, Inc. (NYSE:MTZ), Empresas ICA SA (ADR) (NYSE:ICA), Aegion Corp - Class A (NASDAQ:AEGN), Tutor Perini Corp (NYSE:TPC), and Primoris Services Corp (NASDAQ:PRIM). This group of stocks are the members of the heavy construction industry and their market caps are similar to GVA's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
MasTec, Inc. (NYSE:MTZ)
Empresas ICA SA (ADR) (NYSE:ICA)
Aegion Corp - Class A (NASDAQ:AEGN)
Tutor Perini Corp (NYSE:TPC)
Primoris Services Corp (NASDAQ:PRIM)
Using the results shown by the previously mentioned tactics, average investors should always watch hedge fund and insider trading activity, and Granite Construction Inc. (NYSE:GVA) applies perfectly to this mantra.