It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Gentherm Inc (NASDAQ:THRM).
Gentherm Inc (NASDAQ:THRM) investors should pay attention to a decrease in support from the world’s most successful money managers lately. There were 13 hedge funds in our database with THRM positions at the end of the second quarter, 2 more than there were a quarter later. At the end of this article we will also compare THRM to other stocks including Tree.com Inc (NASDAQ:TREE), Calavo Growers, Inc. (NASDAQ:CVGW), and Astronics Corporation (NASDAQ:ATRO) to get a better sense of its popularity.
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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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Hedge fund activity in Gentherm Inc (NASDAQ:THRM)
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 15% fall from the previous quarter. The graph below displays the number of hedge funds with bullish positions in THRM over the last 5 quarters, a total which has imploded by 50% in 2016. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Trigran Investments, led by Douglas T. Granat, holds the biggest position in Gentherm Inc (NASDAQ:THRM). Trigran Investments has a $9.3 million position in the stock, comprising 2.4% of its 13F portfolio. The second most bullish fund manager is Skylands Capital, led by Charles Paquelet, holding a $4.6 million position. Remaining professional money managers that are bullish encompass Matthew A. Weatherbie’s Weatherbie Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Renaissance Technologies, one of the largest hedge funds in the world. 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-micro-cap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. Interestingly, Scott Lawrence Swid’s SLS Management dropped the largest position of the 700 funds watched by Insider Monkey, worth an estimated $3.3 million in stock. Matthew Taylor and Ty Popplewell’s fund, Kortright Capital Partners, also said goodbye to its stock, about $1.7 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Gentherm Inc (NASDAQ:THRM) but similarly valued. We will take a look at Tree.com Inc (NASDAQ:TREE), Calavo Growers, Inc. (NASDAQ:CVGW), Astronics Corporation (NASDAQ:ATRO), and Q2 Holdings Inc (NYSE:QTWO). This group of stocks’ market caps are similar to THRM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TREE | 19 | 110299 | 0 |
| CVGW | 18 | 59180 | 5 |
| ATRO | 9 | 15129 | 1 |
| QTWO | 12 | 36339 | -2 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $28 million in THRM’s case. Tree.com Inc (NASDAQ:TREE) is the most popular stock in this table. On the other hand Astronics Corporation (NASDAQ:ATRO) is the least popular one with only 9 bullish hedge fund positions. Gentherm Inc (NASDAQ:THRM) 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 TREE might be a better candidate to consider taking a long position in.
Disclosure: None
