GoPro Inc (NASDAQ:GPRO) shares flew yesterday to a high that was over 8% above its closing price on Friday as the action camera maker announced its premium content licensing portal, a concrete step towwards the firm transforming itself into a media company. The stock closed yesterday up by 7.34%. While it has given back some of those gains in morning trading, down by 2.52% today, it is still up by nearly 5% since the announcement. According to GoPro Inc (NASDAQ:GPRO), the licensing portal is its next step in rewarding the GoPro creator community. Through the portal, global advertising brands and agencies will be given the chance to buy content made by GoPro users, and consequently, GoPro users will be compensated for their content. Analyst Charles Anderson of Dougherty & Co. is quoted writing in a note that he believes GoPro can build a licensing division that is similar in revenue size to Getty Images, which had about $900 million in revenue in 2014.
The confidence the market has in GoPro this week is reflected in the sentiment of hedge funds in the first quarter. It may appear to investors that a 10.79% quarter-over-quarter decline in the total value of holdings held by hedge funds we track who were long in GoPro Inc (NASDAQ:GPRO) on March 31 is a clearly bearish sign. However, taking the 31.34% fall of the stock’s price from January 2 to March 31 of this year into account, hedge funds actually bought more GoPro shares in the first quarter, possibly taking advantage of the reduced entry cost. They were not disappointed in the second quarter as the stock climbed by 21.45% from April 1 to June 30. Heading into the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long in this stock, up by three from the end of the fourth quarter, a clear bullish sign. The held $284.33 million in GoPro shares as of March 31.
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 139.7% over the last 34 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
An additional area Insider Monkey tracks is insider transactions as these trades can tell people whether certain key insiders of companies are betting on their stocks. For GoPro, there were no recorded purchases by insiders through July 20. The latest sale was by General Counsel Sharon Zezima who sold all of her shares by June 15. She sold a total of 6,000 shares on said date. Meanwhile President Anthony John Bates has sold a total of 225,170 shares in five transactions in June.
Considering all of this, we’re going to appraise the latest key hedge fund trades concerning GoPro Inc.
How are hedge funds trading GoPro Inc (NASDAQ:GPRO)?
Of the funds tracked by Insider Monkey, John Griffin‘s Blue Ridge Capital had the most valuable position in GoPro Inc (NASDAQ:GPRO), owning 1.1 million shares worth close to $47.8 million, corresponding to 0.5% of its total 13F portfolio. On Blue Ridge Capital’s heels is Citadel Investment Group, managed by Ken Griffin, which held a $44.6 million position of call options made up of about 1.03 million underlying shares; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Edward Gilhuly and Scott Stuart’s Sageview Capital, Ricky Sandler’s Eminence Capital, and David Gallo’s Valinor Management LLC.
As aggregate interest increased, key money managers have jumped into GoPro Inc (NASDAQ:GPRO) headfirst. The previously mentioned Sageview Capital, managed by Edward Gilhuly and Scott Stuart, assembled the largest position in GoPro Inc (NASDAQ:GPRO). Sageview Capital had $18.7 million invested in the company at the end of the quarter, owning 430,000 shares. Jim Simons’ Renaissance Technologies also made a $14.4 million investment in the stock during the quarter, buying 330,800 shares. The following funds were also among the new GoPro investors: Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, John Thaler’s JAT Capital Management, and Eric Chen’s Antipodean Advisors.
As GoPro Inc (NASDAQ:GPRO) takes more steps down the path to becoming a media company and seeing how the market and hedge funds are confident in the firm, we recommend a long position in the company’s stock.
Disclosure: None
