Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in GoPro Inc (NASDAQ:GPRO)? The smart money sentiment can provide an answer to this question.
GoPro Inc (NASDAQ:GPRO) investors should pay attention to an increase in support from the world’s most elite money managers of late. GoPro Inc (NASDAQ:GPRO) was in 36 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GPRO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the 21st century investor’s toolkit there are dozens of signals stock market investors put to use to evaluate their holdings. A pair of the less known signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outpace the market by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
David Einhorn of Greenlight Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the key hedge fund action encompassing GoPro Inc (NASDAQ:GPRO).
Do Hedge Funds Think GPRO Is A Good Stock To Buy Now?
At the end of March, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the fourth quarter of 2020. On the other hand, there were a total of 9 hedge funds with a bullish position in GPRO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Iridian Asset Management held the most valuable stake in GoPro Inc (NASDAQ:GPRO), which was worth $71.5 million at the end of the fourth quarter. On the second spot was Prentice Capital Management which amassed $70.4 million worth of shares. D E Shaw, Renaissance Technologies, and Alyeska Investment Group 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 Prentice Capital Management allocated the biggest weight to GoPro Inc (NASDAQ:GPRO), around 21.86% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, earmarking 3.21 percent of its 13F equity portfolio to GPRO.
As aggregate interest increased, key hedge funds have been driving this bullishness. Iridian Asset Management, managed by David Cohen and Harold Levy, created the biggest position in GoPro Inc (NASDAQ:GPRO). Iridian Asset Management had $71.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $23.4 million position during the quarter. The other funds with brand new GPRO positions are David Einhorn’s Greenlight Capital, Ken Grossman and Glen Schneider’s SG Capital Management, and Sander Gerber’s Hudson Bay Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as GoPro Inc (NASDAQ:GPRO) but similarly valued. We will take a look at Zuora, Inc. (NYSE:ZUO), GenMark Diagnostics, Inc (NASDAQ:GNMK), Cornerstone Building Brands, Inc. (NYSE:CNR), EnPro Industries, Inc. (NYSE:NPO), Heska Corp (NASDAQ:HSKA), Five Prime Therapeutics Inc (NASDAQ:FPRX), and Community Health Systems, Inc. (NYSE:CYH). All of these stocks’ market caps resemble GPRO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZUO | 21 | 151435 | -1 |
| GNMK | 30 | 529479 | 9 |
| CNR | 27 | 169852 | 5 |
| NPO | 17 | 213801 | 3 |
| HSKA | 28 | 283963 | 11 |
| FPRX | 29 | 719407 | 4 |
| CYH | 21 | 401413 | -5 |
| Average | 24.7 | 352764 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $395 million in GPRO’s case. GenMark Diagnostics, Inc (NASDAQ:GNMK) is the most popular stock in this table. On the other hand EnPro Industries, Inc. (NYSE:NPO) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks GoPro Inc (NASDAQ:GPRO) is more popular among hedge funds. Our overall hedge fund sentiment score for GPRO is 90. 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. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Unfortunately GPRO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GPRO were disappointed as the stock returned -0.3% since the end of the first quarter (through 6/25) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
