Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Generac Holdings Inc. (NYSE:GNRC) .
Generac Holdings Inc. (NYSE:GNRC) shareholders have witnessed an increase in enthusiasm from smart money recently. GNRC was in 16 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with GNRC holdings at the end of the previous quarter. At the end of this article we will also compare GNRC to other stocks including PBF Energy Inc (NYSE:PBF), Select Income REIT (NYSE:SIR), and Yelp Inc (NYSE:YELP) to get a better sense of its popularity.
Follow Generac Holdings Inc. (NYSE:GNRC)
Follow Generac Holdings Inc. (NYSE:GNRC)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with Generac Holdings Inc. (NYSE:GNRC)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GNRC over the last 5 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Water Street Capital, led by Gilchrist Berg, holds the largest position in Generac Holdings Inc. (NYSE:GNRC). Water Street Capital has a $69 million position in the stock, comprising 2.6% of its 13F portfolio. Coming in second is Matt Sirovich and Jeremy Mindich of Scopia Capital, with a $41 million position. Other hedge funds and institutional investors with similar optimism contain Ian Simm’s Impax Asset Management, and Jim Simons’ Renaissance Technologies. We should note that Impax Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key hedge funds have been driving this bullishness. Point72 Asset Management, led by Steve Cohen, assembled the largest position in Generac Holdings Inc. (NYSE:GNRC). Point72 Asset Management had $6.7 million invested in the company at the end of the quarter. Robert Polak’s Anchor Bolt Capital also made a $4.2 million investment in the stock during the quarter. The other funds with brand new GNRC positions are Neil Chriss’ Hutchin Hill Capital, Michael Platt and William Reeves’ BlueCrest Capital Mgmt., and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks similar to Generac Holdings Inc. (NYSE:GNRC). These stocks are PBF Energy Inc (NYSE:PBF), Select Income REIT (NYSE:SIR), Yelp Inc (NYSE:YELP), and Valley National Bancorp (NYSE:VLY). This group of stocks’ market caps are similar to GNRC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PBF | 23 | 497804 | -1 |
| SIR | 12 | 80113 | -2 |
| YELP | 40 | 1087703 | -5 |
| VLY | 14 | 75034 | 1 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $435 million. That figure was $159 million in GNRC’s case. Yelp Inc (NYSE:YELP) is the most popular stock in this table. On the other hand Select Income REIT (NYSE:SIR) is the least popular one with only 12 bullish hedge fund positions. Generac Holdings Inc. (NYSE:GNRC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard YELP might be a better candidate to consider taking a long position in.
Disclosure: None
