IS GGG Stock A Buy or Sell?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Graco Inc. (NYSE:GGG) in this article.

Is GGG stock a buy? Prominent investors were in a bearish mood. The number of bullish hedge fund bets fell by 5 lately. Graco Inc. (NYSE:GGG) was in 25 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 32. Our calculations also showed that GGG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 30 hedge funds in our database with GGG positions at the end of the third quarter.

In the financial world there are many metrics market participants put to use to value publicly traded companies. A duo of the best metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outclass the broader indices by a superb amount (see the details here).

Israel Englander of Millennium Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to review the new hedge fund action encompassing Graco Inc. (NYSE:GGG).

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

At fourth quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in GGG a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, GAMCO Investors was the largest shareholder of Graco Inc. (NYSE:GGG), with a stake worth $91 million reported as of the end of December. Trailing GAMCO Investors was Citadel Investment Group, which amassed a stake valued at $37.2 million. Millennium Management, Arrowstreet Capital, and Hosking Partners 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 GAMCO Investors allocated the biggest weight to Graco Inc. (NYSE:GGG), around 0.85% of its 13F portfolio. Hosking Partners is also relatively very bullish on the stock, setting aside 0.42 percent of its 13F equity portfolio to GGG.

Because Graco Inc. (NYSE:GGG) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their full holdings by the end of the fourth quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest stake of all the hedgies monitored by Insider Monkey, valued at about $17.2 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dumped its stock, about $3.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 5 funds by the end of the fourth quarter.

Let’s also examine hedge fund activity in other stocks similar to Graco Inc. (NYSE:GGG). We will take a look at Qiagen NV (NASDAQ:QGEN), Atmos Energy Corporation (NYSE:ATO), Booz Allen Hamilton Holding Corporation (NYSE:BAH), PPD, Inc. (NASDAQ:PPD), IPG Photonics Corporation (NASDAQ:IPGP), Sibanye Stillwater Limited (NYSE:SBSW), and Fortune Brands Home & Security Inc (NYSE:FBHS). This group of stocks’ market caps are closest to GGG’s market cap.

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As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $442 million. That figure was $269 million in GGG’s case. Fortune Brands Home & Security Inc (NYSE:FBHS) is the most popular stock in this table. On the other hand Sibanye Stillwater Limited (NYSE:SBSW) is the least popular one with only 17 bullish hedge fund positions. Graco Inc. (NYSE:GGG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GGG is 54.2. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately GGG wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); GGG investors were disappointed as the stock returned 5.3% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.