Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Graco Inc. (NYSE:GGG) to find out whether there were any major changes in hedge funds’ views.
Graco Inc. (NYSE:GGG) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Graco Inc. (NYSE:GGG) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GGG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Jim Simons of Renaissance Technologies
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a gander at the new hedge fund action surrounding Graco Inc. (NYSE:GGG).
Do Hedge Funds Think GGG Is A Good Stock To Buy Now?
At third quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the second quarter of 2021. On the other hand, there were a total of 30 hedge funds with a bullish position in GGG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GAMCO Investors held the most valuable stake in Graco Inc. (NYSE:GGG), which was worth $81.2 million at the end of the third quarter. On the second spot was Millennium Management which amassed $58 million worth of shares. Renaissance Technologies, Two Sigma Advisors, and Hosking Partners 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 0.72% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, dishing out 0.63 percent of its 13F equity portfolio to GGG.
As industrywide interest jumped, specific money managers have jumped into Graco Inc. (NYSE:GGG) headfirst. Tudor Investment Corp, managed by Paul Tudor Jones, established the most valuable position in Graco Inc. (NYSE:GGG). Tudor Investment Corp had $6 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $3.9 million investment in the stock during the quarter. The other funds with brand new GGG positions are Peter Algert’s Algert Global, Jinghua Yan’s TwinBeech Capital, and Greg Poole’s Echo Street Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Graco Inc. (NYSE:GGG). We will take a look at Allegion plc (NYSE:ALLE), Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), Qiagen NV (NASDAQ:QGEN), Bruker Corporation (NASDAQ:BRKR), Godaddy Inc (NYSE:GDDY), FMC Corporation (NYSE:FMC), and InterContinental Hotels Group PLC (NYSE:IHG). This group of stocks’ market values match GGG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALLE | 32 | 1002211 | -5 |
| KOF | 6 | 460706 | -3 |
| QGEN | 21 | 599491 | -1 |
| BRKR | 31 | 552162 | 0 |
| GDDY | 37 | 2299629 | -2 |
| FMC | 28 | 349943 | -5 |
| IHG | 9 | 51166 | 3 |
| Average | 23.4 | 759330 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $759 million. That figure was $258 million in GGG’s case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 6 bullish hedge fund positions. Graco Inc. (NYSE:GGG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GGG is 81.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately GGG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GGG were disappointed as the stock returned 4.4% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
