Hedge Funds Have Never Been This Bullish On Gates Industrial Corporation plc (GTES)

In this article we will analyze whether Gates Industrial Corporation plc (NYSE:GTES) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Gates Industrial Corporation plc (NYSE:GTES) investors should pay attention to an increase in support from the world’s most elite money managers recently. Gates Industrial Corporation plc (NYSE:GTES) was in 29 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 19 hedge funds in our database with GTES positions at the end of the second quarter. Our calculations also showed that GTES isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind we’re going to review the latest hedge fund action encompassing Gates Industrial Corporation plc (NYSE:GTES).

Robert Atchinson of Adage Capital Management

Do Hedge Funds Think GTES Is A Good Stock To Buy Now?

At third quarter’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 53% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in GTES a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Paradice Investment Management was the largest shareholder of Gates Industrial Corporation plc (NYSE:GTES), with a stake worth $42.9 million reported as of the end of September. Trailing Paradice Investment Management was Driehaus Capital, which amassed a stake valued at $33.1 million. Millennium Management, MD Sass, and Islet 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 Roubaix Capital allocated the biggest weight to Gates Industrial Corporation plc (NYSE:GTES), around 2.37% of its 13F portfolio. MD Sass is also relatively very bullish on the stock, dishing out 2.28 percent of its 13F equity portfolio to GTES.

Now, specific money managers were leading the bulls’ herd. Paradice Investment Management, managed by David Paradice, created the most valuable position in Gates Industrial Corporation plc (NYSE:GTES). Paradice Investment Management had $42.9 million invested in the company at the end of the quarter. Martin D. Sass’s MD Sass also initiated a $13.4 million position during the quarter. The other funds with new positions in the stock are Joseph Samuels’s Islet Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Benjamin A. Smith’s Laurion Capital Management.

Let’s go over hedge fund activity in other stocks similar to Gates Industrial Corporation plc (NYSE:GTES). These stocks are Cirrus Logic, Inc. (NASDAQ:CRUS), Foot Locker, Inc. (NYSE:FL), Lazard Ltd (NYSE:LAZ), Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Cloudera, Inc. (NYSE:CLDR), Fastly, Inc. (NYSE:FSLY), and Travel + Leisure Co. (NYSE:TNL). This group of stocks’ market valuations are closest to GTES’s market valuation.

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As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $811 million. That figure was $202 million in GTES’s case. Travel + Leisure Co. (NYSE:TNL) is the most popular stock in this table. On the other hand Fastly, Inc. (NYSE:FSLY) is the least popular one with only 17 bullish hedge fund positions. Gates Industrial Corporation plc (NYSE:GTES) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GTES is 77.5. 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 GTES wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GTES were disappointed as the stock returned -1.5% 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.