Is Gildan Activewear Inc (GIL) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Gildan Activewear Inc (NYSE:GIL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is GIL a good stock to buy? Gildan Activewear Inc (NYSE:GIL) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic is 27. GIL investors should be aware of an increase in enthusiasm from smart money lately. There were 17 hedge funds in our database with GIL holdings at the end of March. Our calculations also showed that GIL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Richard S. Pzena of Pzena Investment Management

Keeping this in mind we’re going to take a gander at the latest hedge fund action surrounding Gildan Activewear Inc (NYSE:GIL).

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

At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GIL over the last 24 quarters. So, let’s examine 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, Richard S. Pzena’s Pzena Investment Management has the largest position in Gildan Activewear Inc (NYSE:GIL), worth close to $455.8 million, amounting to 1.8% of its total 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $66.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Glenn W. Welling’s Engaged Capital, Joseph Sirdevan’s Galibier Capital Management and William Hyatt’s Hudson Way Capital Management. In terms of the portfolio weights assigned to each position Hudson Way Capital Management allocated the biggest weight to Gildan Activewear Inc (NYSE:GIL), around 7.57% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, earmarking 5.6 percent of its 13F equity portfolio to GIL.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Gildan Activewear Inc (NYSE:GIL) headfirst. Navellier & Associates, managed by Louis Navellier, created the largest position in Gildan Activewear Inc (NYSE:GIL). Navellier & Associates had $0.5 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Lee Ainslie’s Maverick Capital.

Let’s check out hedge fund activity in other stocks similar to Gildan Activewear Inc (NYSE:GIL). These stocks are The New York Times Company (NYSE:NYT), The AZEK Company Inc. (NYSE:AZEK), Woori Financial Group Inc. (NYSE:WF), People’s United Financial, Inc. (NASDAQ:PBCT), Casey’s General Stores, Inc. (NASDAQ:CASY), Coty Inc (NYSE:COTY), and Tenet Healthcare Corp (NYSE:THC). All of these stocks’ market caps are closest to GIL’s market cap.

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As you can see these stocks had an average of 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $747 million. That figure was $726 million in GIL’s case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 2 bullish hedge fund positions. Gildan Activewear Inc (NYSE:GIL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GIL is 46.6. 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 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately GIL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GIL investors were disappointed as the stock returned -0.1% since the end of June (through 10/22) 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 in 2021.

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