The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Grupo Financiero Galicia S.A. (NASDAQ:GGAL) based on those filings.
Grupo Financiero Galicia S.A. (NASDAQ:GGAL) investors should pay attention to a decrease in hedge fund sentiment in recent months. Our calculations also showed that GGAL isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s check out the fresh hedge fund action regarding Grupo Financiero Galicia S.A. (NASDAQ:GGAL).
What have hedge funds been doing with Grupo Financiero Galicia S.A. (NASDAQ:GGAL)?
At Q2’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the first quarter of 2019. On the other hand, there were a total of 16 hedge funds with a bullish position in GGAL a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Grupo Financiero Galicia S.A. (NASDAQ:GGAL) was held by EMS Capital, which reported holding $37.2 million worth of stock at the end of March. It was followed by Odey Asset Management Group with a $26 million position. Other investors bullish on the company included Samlyn Capital, Autonomy Capital, and Citadel Investment Group.
Due to the fact that Grupo Financiero Galicia S.A. (NASDAQ:GGAL) has experienced bearish sentiment from the smart money, we can see that there lies a certain “tier” of money managers that slashed their entire stakes last quarter. Intriguingly, Israel Englander’s Millennium Management dropped the largest stake of all the hedgies tracked by Insider Monkey, worth about $21.7 million in stock, and John Horseman’s Horseman Capital Management was right behind this move, as the fund dropped about $9.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Grupo Financiero Galicia S.A. (NASDAQ:GGAL). These stocks are Ingredion Incorporated (NYSE:INGR), Smartsheet Inc. (NYSE:SMAR), The Scotts Miracle-Gro Company (NYSE:SMG), and Ultrapar Participacoes SA (NYSE:UGP). This group of stocks’ market caps resemble GGAL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INGR | 21 | 255889 | 3 |
| SMAR | 46 | 1485379 | 16 |
| SMG | 24 | 322590 | 8 |
| UGP | 7 | 54213 | -5 |
| Average | 24.5 | 529518 | 5.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $530 million. That figure was $110 million in GGAL’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 7 bullish hedge fund positions. Grupo Financiero Galicia S.A. (NASDAQ:GGAL) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GGAL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GGAL investors were disappointed as the stock returned -63.4% during the third 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 20 most popular stocks (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
