The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot. In this article, we analyze what the smart money thinks of Global Payments Inc (NYSE:GPN) and find out how it is affected by hedge funds’ moves.
Is Global Payments Inc (NYSE:GPN) a cheap investment today? Prominent investors are undoubtedly actually turning less bullish. The number of long hedge fund bets fell by 10 lately. GPN was in 20 hedge funds’ portfolios at the end of September. There were 30 hedge funds in our database with GPN positions at the end of the previous quarter. At the end of this article we will also compare GPN to other stocks including Quest Diagnostics Inc (NYSE:DGX), CMS Energy Corporation (NYSE:CMS), and Cintas Corporation (NASDAQ:CTAS) to get a better sense of its popularity.
Follow Global Payments Inc (NYSE:GPN)
Follow Global Payments Inc (NYSE:GPN)
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.
Maxx-Studio/Shutterstock.com
What does the smart money think about Global Payments Inc (NYSE:GPN)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GPN over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Citadel Investment Group, led by Ken Griffin, holds the number one position in Global Payments Inc (NYSE:GPN). Citadel Investment Group has a $107.2 million position in the stock. On Citadel Investment Group’s heels is Alkeon Capital Management, led by Panayotis Takis Sparaggis, holding a $79 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Jim Simons’ Renaissance Technologies, Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’ 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.
Since Global Payments Inc (NYSE:GPN) has encountered falling interest from the smart money, it’s easy to see that there is a sect of funds that decided to sell off their entire stakes in the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group cashed in the largest investment of all the hedgies monitored by Insider Monkey, comprising about $7.4 million in call options. George Hall’s fund, Clinton Group, also cut its stock, about $3.4 million worth.
Let’s now take a look at hedge fund activity in other stocks similar to Global Payments Inc (NYSE:GPN). These stocks are Quest Diagnostics Inc (NYSE:DGX), CMS Energy Corporation (NYSE:CMS), Cintas Corporation (NASDAQ:CTAS), and Vodafone Group Plc (ADR) (NASDAQ:VOD). This group of stocks’ market values match GPN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DGX | 24 | 349248 | -1 |
| CMS | 19 | 395362 | 1 |
| CTAS | 33 | 587766 | 6 |
| VOD | 18 | 445786 | -4 |
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $445 million. That figure was $436 million in GPN’s case. Cintas Corporation (NASDAQ:CTAS) is the most popular stock in this table. On the other hand Vodafone Group Plc (ADR) (NASDAQ:VOD) is the least popular one with only 18 bullish hedge fund positions. Global Payments Inc (NYSE:GPN) 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 CTAS might be a better candidate to consider taking a long position in.
Disclosure: None
