Do Hedge Funds Love Generac Holdings Inc. (GNRC)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Generac Holdings Inc. (NYSE:GNRC).

Generac Holdings Inc. (NYSE:GNRC) investors should pay attention to an increase in hedge fund sentiment lately. Generac Holdings Inc. (NYSE:GNRC) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that GNRC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s go over the fresh hedge fund action regarding Generac Holdings Inc. (NYSE:GNRC).

Mark Kingdon of Kingdon Capital

Do Hedge Funds Think GNRC Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. By comparison, 43 hedge funds held shares or bullish call options in GNRC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Ian Simm’s Impax Asset Management has the number one position in Generac Holdings Inc. (NYSE:GNRC), worth close to $228.8 million, amounting to 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $151.5 million call position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions comprise Cliff Asness’s AQR Capital Management, Jos Shaver’s Electron Capital Partners and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Precept Capital Management allocated the biggest weight to Generac Holdings Inc. (NYSE:GNRC), around 3.81% of its 13F portfolio. Electron Capital Partners is also relatively very bullish on the stock, earmarking 3.05 percent of its 13F equity portfolio to GNRC.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Encompass Capital Advisors, managed by Todd J. Kantor, initiated the most outsized position in Generac Holdings Inc. (NYSE:GNRC). Encompass Capital Advisors had $26 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also initiated a $12.3 million position during the quarter. The following funds were also among the new GNRC investors: Benjamin A. Smith’s Laurion Capital Management, Jay Genzer’s Thames Capital Management, and Michael Gelband’s ExodusPoint Capital.

Let’s check out hedge fund activity in other stocks similar to Generac Holdings Inc. (NYSE:GNRC). These stocks are Consolidated Edison, Inc. (NYSE:ED), Albemarle Corporation (NYSE:ALB), ViacomCBS Inc. (NASDAQ:VIAC), Canon Inc. (NYSE:CAJ), Carvana Co. (NYSE:CVNA), Gartner Inc (NYSE:IT), and United Rentals, Inc. (NYSE:URI). This group of stocks’ market values match GNRC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.4 hedge funds with bullish positions and the average amount invested in these stocks was $1962 million. That figure was $725 million in GNRC’s case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 8 bullish hedge fund positions. Generac Holdings Inc. (NYSE:GNRC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GNRC is 60.9. 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 positive signal but 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately GNRC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GNRC were disappointed as the stock returned 3.1% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.

Suggested Articles:

• Billionaire Lee Ainslie’s Top 10 Stock Picks
• 20 Best countries to live and work in 2021
• 10 Easiest Occupational Therapy Schools To Get Into

Disclosure: None. This article was originally published at Insider Monkey.