Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Graco Inc. (NYSE:GGG) based on that data.
Graco Inc. (NYSE:GGG) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 21 hedge funds’ portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Carnival Corporation & plc (NYSE:CUK), Banco de Chile (NYSE:BCH), and Catalent Inc (NYSE:CTLT) to gather more data points. Our calculations also showed that GGG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are perceived as slow, old investment tools of the past. While there are more than 8000 funds in operation at present, Our experts look at the aristocrats of this club, around 850 funds. Most estimates calculate that this group of people have their hands on bulk of the smart money’s total capital, and by shadowing their matchless stock picks, Insider Monkey has uncovered several investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Lee Ainslie of Maverick Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a gander at the fresh hedge fund action encompassing Graco Inc. (NYSE:GGG).
What does smart money think about Graco Inc. (NYSE:GGG)?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in GGG a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GAMCO Investors was the largest shareholder of Graco Inc. (NYSE:GGG), with a stake worth $79.2 million reported as of the end of September. Trailing GAMCO Investors was Hosking Partners, which amassed a stake valued at $12.7 million. GLG Partners, Royce & Associates, and Winton Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Graco Inc. (NYSE:GGG), around 0.94% of its 13F portfolio. Hosking Partners is also relatively very bullish on the stock, designating 0.44 percent of its 13F equity portfolio to GGG.
Since Graco Inc. (NYSE:GGG) has faced falling interest from the smart money, it’s easy to see that there were a few hedge funds that elected to cut their entire stakes in the first quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $10.8 million in stock. Bernard Selz’s fund, Selz Capital, also dumped its stock, about $7.8 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Graco Inc. (NYSE:GGG) but similarly valued. These stocks are Carnival Corporation & plc (NYSE:CUK), Banco de Chile (NYSE:BCH), Catalent Inc (NYSE:CTLT), and Citizens Financial Group Inc (NYSE:CFG). This group of stocks’ market values are closest to GGG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CUK | 9 | 41281 | -5 |
| BCH | 4 | 34819 | -6 |
| CTLT | 27 | 384560 | 6 |
| CFG | 46 | 828393 | 4 |
| Average | 21.5 | 322263 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $322 million. That figure was $158 million in GGG’s case. Citizens Financial Group Inc (NYSE:CFG) is the most popular stock in this table. On the other hand Banco de Chile (NYSE:BCH) is the least popular one with only 4 bullish hedge fund positions. Graco Inc. (NYSE:GGG) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately GGG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); GGG investors were disappointed as the stock returned 1% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
