Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about G&K Services Inc (NASDAQ:GK) in this article.
G&K Services Inc (NASDAQ:GK) has experienced an increase in hedge fund interest lately. At the end of this article we will also compare GK to other stocks including Main Street Capital Corporation (NYSE:MAIN), Teekay Offshore Partners L.P. (NYSE:TOO), and Kindred Healthcare, Inc. (NYSE:KND) to get a better sense of its popularity.
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If you’d ask most stock holders, hedge funds are perceived as unimportant, old financial tools of the past. While there are over an 8000 funds with their doors open at present, We choose to focus on the bigwigs of this group, approximately 700 funds. It is estimated that this group of investors shepherd bulk of the smart money’s total asset base, and by keeping track of their first-class equity investments, Insider Monkey has discovered numerous investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s take a gander at the latest action regarding G&K Services Inc (NASDAQ:GK).
What does the smart money think about G&K Services Inc (NASDAQ:GK)?
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the second quarter. With the smart money’s capital changing hands, there exists a select group of key 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, Renaissance Technologies holds the most valuable position in G&K Services Inc (NASDAQ:GK). Renaissance Technologies has a $18.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Lee Munder Capital Group, managed by Lee Munder, which holds a $12.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. The remaining members of the smart money with similar optimism comprise Greg Poole’s Echo Street Capital Management, Cliff Asness’ AQR Capital Management and Andrew Sandler’s Sandler Capital Management.
Consequently, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the biggest position in G&K Services Inc (NASDAQ:GK). Millennium Management had $3.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1 million investment in the stock during the quarter. The other funds with brand new GK positions are D. E. Shaw’s D E Shaw and Chao Ku’s Nine Chapters Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to G&K Services Inc (NASDAQ:GK). These stocks are Main Street Capital Corporation (NYSE:MAIN), Teekay Offshore Partners L.P. (NYSE:TOO), Kindred Healthcare, Inc. (NYSE:KND), and CONMED Corporation (NASDAQ:CNMD). This group of stocks’ market valuations are closest to GK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAIN | 7 | 17528 | 2 |
| TOO | 6 | 40607 | 2 |
| KND | 35 | 406879 | 3 |
| CNMD | 19 | 249363 | 2 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $179 million, compared to $65 million in GK’s case. Kindred Healthcare, Inc. (NYSE:KND) is the most popular stock in this table. On the other hand Teekay Offshore Partners L.P. (NYSE:TOO) is the least popular one with only 6 bullish hedge fund positions. G&K Services Inc (NASDAQ:GK) 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 KND might be a better candidate to consider a long position.
