Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The fourth quarter of 2018 is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 7 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Genuine Parts Company (NYSE:GPC).
Is Genuine Parts Company (NYSE:GPC) a great investment today? The best stock pickers are buying. The number of bullish hedge fund positions inched up by 8 recently. Our calculations also showed that GPC isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s check out the recent hedge fund action regarding Genuine Parts Company (NYSE:GPC).
Hedge fund activity in Genuine Parts Company (NYSE:GPC)
Heading into the first quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards GPC over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in Genuine Parts Company (NYSE:GPC). GAMCO Investors has a $137.7 million position in the stock, comprising 1.2% of its 13F portfolio. The second most bullish fund manager is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $83.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Joel Greenblatt’s Gotham Asset Management.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Maverick Capital, managed by Lee Ainslie, initiated the most outsized position in Genuine Parts Company (NYSE:GPC). Maverick Capital had $11.2 million invested in the company at the end of the quarter. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital also initiated a $10 million position during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Ken Griffin’s Citadel Investment Group, and Jeffrey Talpins’s Element Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Genuine Parts Company (NYSE:GPC). These stocks are Maxim Integrated Products Inc. (NASDAQ:MXIM), CMS Energy Corporation (NYSE:CMS), Citizens Financial Group Inc (NYSE:CFG), and Regions Financial Corporation (NYSE:RF). This group of stocks’ market caps are similar to GPC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MXIM | 24 | 341591 | -6 |
| CMS | 21 | 339800 | -1 |
| CFG | 43 | 1363944 | 1 |
| RF | 42 | 674539 | 11 |
| Average | 32.5 | 679969 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $680 million. That figure was $458 million in GPC’s case. Citizens Financial Group Inc (NYSE:CFG) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 21 bullish hedge fund positions. Genuine Parts Company (NYSE:GPC) 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately GPC wasn’t in this group. Hedge funds that bet on GPC were disappointed as the stock returned 12.3% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
