Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. The second half of 2015 and the first few months of this year was a stressful period for hedge funds. However, things have been taking a turn for the better in the second half of this year. Small-cap stocks which hedge funds are usually overweight outperformed the market by double digits and it may be a good time to pay attention to hedge funds’ picks before it is too late. In this article we are going to analyze the hedge fund sentiment towards Genuine Parts Company (NYSE:GPC) to find out whether it was one of their high conviction long-term ideas.
Is Genuine Parts Company (NYSE:GPC) a buy, sell, or hold? The best stock pickers are becoming hopeful. The number of bullish hedge fund positions advanced by 1 lately. GPC was in 23 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with GPC positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Northern Trust Corporation (NASDAQ:NTRS), TD Ameritrade Holding Corp. (NYSE:AMTD), and Grupo Televisa SAB (ADR) (NYSE:TV) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s analyze the key action surrounding Genuine Parts Company (NYSE:GPC).
How are hedge funds trading Genuine Parts Company (NYSE:GPC)?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 5% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, GAMCO Investors, led by Mario Gabelli, holds the most valuable position in Genuine Parts Company (NYSE:GPC). GAMCO Investors has a $198.4 million position in the stock, comprising 1.3% of its 13F portfolio. On GAMCO Investors’s heels is David Harding of Winton Capital Management, with a $41.8 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Joel Greenblatt’s Gotham Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’s AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Clinton Group, managed by George Hall, created the largest position in Genuine Parts Company (NYSE:GPC). According to regulatory filings, the fund had $4.9 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $1.8 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Genuine Parts Company (NYSE:GPC). We will take a look at Northern Trust Corporation (NASDAQ:NTRS), TD Ameritrade Holding Corp. (NYSE:AMTD), Grupo Televisa SAB (ADR) (NYSE:TV), and American Water Works Co., Inc. (NYSE:AWK). All of these stocks’ market caps match GPC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NTRS | 30 | 486076 | 3 |
| AMTD | 17 | 290831 | 4 |
| TV | 22 | 1695621 | 0 |
| AWK | 24 | 404404 | 3 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $719 million. That figure was $348 million in GPC’s case. Northern Trust Corporation (NASDAQ:NTRS) is the most popular stock in this table. On the other hand TD Ameritrade Holding Corp. (NYSE:AMTD) is the least popular one with only 17 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. In this regard NTRS might be a better candidate to consider a long position.
Disclosure: none.
