Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Gartner Inc (NYSE:IT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Gartner Inc (NYSE:IT) has seen an increase in hedge fund interest in recent months. IT was in 19 hedge funds’ portfolios at the end of the third quarter of 2019. There were 17 hedge funds in our database with IT holdings at the end of the previous quarter. Our calculations also showed that IT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Phill Gross of Adage Capital Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the fresh hedge fund action regarding Gartner Inc (NYSE:IT).
How have hedgies been trading Gartner Inc (NYSE:IT)?
Heading into the fourth quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IT over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Gartner Inc (NYSE:IT) was held by Bares Capital Management, which reported holding $347 million worth of stock at the end of September. It was followed by Melvin Capital Management with a $114.4 million position. Other investors bullish on the company included Select Equity Group, Adage Capital Management, and Greenhouse Funds. In terms of the portfolio weights assigned to each position Bares Capital Management allocated the biggest weight to Gartner Inc (NYSE:IT), around 10.41% of its 13F portfolio. Lucha Capital Management is also relatively very bullish on the stock, setting aside 3.2 percent of its 13F equity portfolio to IT.
As industrywide interest jumped, specific money managers have jumped into Gartner Inc (NYSE:IT) headfirst. Greenhouse Funds, managed by Joe Milano, established the biggest position in Gartner Inc (NYSE:IT). Greenhouse Funds had $14.7 million invested in the company at the end of the quarter. Marcelo Desio’s Lucha Capital Management also made a $10.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors, Jonathan Soros’s JS Capital, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s now take a look at hedge fund activity in other stocks similar to Gartner Inc (NYSE:IT). We will take a look at Cboe Global Markets, Inc. (BATS:CBOE), Agnico Eagle Mines Limited (NYSE:AEM), Annaly Capital Management, Inc. (NYSE:NLY), and Alliant Energy Corporation (NASDAQ:LNT). This group of stocks’ market valuations match IT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBOE | 23 | 1076442 | -1 |
| AEM | 30 | 382337 | 4 |
| NLY | 15 | 97109 | -6 |
| LNT | 21 | 704846 | -5 |
| Average | 22.25 | 565184 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $565 million. That figure was $660 million in IT’s case. Agnico Eagle Mines Limited (NYSE:AEM) is the most popular stock in this table. On the other hand Annaly Capital Management, Inc. (NYSE:NLY) is the least popular one with only 15 bullish hedge fund positions. Gartner Inc (NYSE:IT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on IT as the stock returned 12.2% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
