Is GNTX Stock A Buy or Sell?

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 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Gentex Corporation (NASDAQ:GNTX) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is GNTX stock a buy? Gentex Corporation (NASDAQ:GNTX) shareholders have witnessed a decrease in enthusiasm from smart money recently. Gentex Corporation (NASDAQ:GNTX) was in 36 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 40. Our calculations also showed that GNTX isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here).

Chuck Royce of Royce & Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy 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. Now let’s review the key hedge fund action surrounding Gentex Corporation (NASDAQ:GNTX).

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

At Q4’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GNTX over the last 22 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Gentex Corporation (NASDAQ:GNTX), which was worth $128.7 million at the end of the fourth quarter. On the second spot was Nitorum Capital which amassed $78.9 million worth of shares. Royce & Associates, Citadel Investment Group, and D E Shaw 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 Nitorum Capital allocated the biggest weight to Gentex Corporation (NASDAQ:GNTX), around 3.05% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, dishing out 0.99 percent of its 13F equity portfolio to GNTX.

Seeing as Gentex Corporation (NASDAQ:GNTX) has witnessed a decline in interest from hedge fund managers, logic holds that there was a specific group of hedge funds who were dropping their entire stakes heading into Q1. It’s worth mentioning that Ken Grossman and Glen Schneider’s SG Capital Management dropped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $9.3 million in stock, and Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC was right behind this move, as the fund dumped about $2 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds heading into Q1.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Gentex Corporation (NASDAQ:GNTX) but similarly valued. These stocks are Arch Coal Inc (NYSE:ACI), SEI Investments Company (NASDAQ:SEIC), Sensata Technologies Holding plc (NYSE:ST), MKS Instruments, Inc. (NASDAQ:MKSI), Lightspeed POS Inc. (NYSE:LSPD), Bruker Corporation (NASDAQ:BRKR), and CF Industries Holdings, Inc. (NYSE:CF). All of these stocks’ market caps resemble GNTX’s market cap.

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As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $978 million. That figure was $666 million in GNTX’s case. CF Industries Holdings, Inc. (NYSE:CF) is the most popular stock in this table. On the other hand Arch Coal Inc (NYSE:ACI) is the least popular one with only 19 bullish hedge fund positions. Gentex Corporation (NASDAQ:GNTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GNTX is 65. 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 positive signal but 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 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately GNTX wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on GNTX were disappointed as the stock returned 6.5% since the end of December (through 4/1) 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 many of these stocks already outperformed the market since 2019.

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

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