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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Garmin Ltd. (NASDAQ:GRMN)?
Is GRMN a good stock to buy? Investors who are in the know were taking an optimistic view. The number of long hedge fund bets went up by 9 in recent months. Garmin Ltd. (NASDAQ:GRMN) was in 32 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GRMN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Phillip Gross of Adage Capital
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 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 we’re going to take a look at the key hedge fund action encompassing Garmin Ltd. (NASDAQ:GRMN).
Do Hedge Funds Think GRMN Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 39% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GRMN over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Garmin Ltd. (NASDAQ:GRMN), with a stake worth $158.4 million reported as of the end of September. Trailing AQR Capital Management was Select Equity Group, which amassed a stake valued at $61.7 million. D E Shaw, Adage Capital Management, and Marshall Wace LLP 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 G2 Investment Partners Management allocated the biggest weight to Garmin Ltd. (NASDAQ:GRMN), around 1.15% of its 13F portfolio. Potrero Capital Research is also relatively very bullish on the stock, earmarking 0.8 percent of its 13F equity portfolio to GRMN.
Consequently, some big names were breaking ground themselves. Renaissance Technologies, established the biggest position in Garmin Ltd. (NASDAQ:GRMN). Renaissance Technologies had $19.7 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $3.7 million investment in the stock during the quarter. The other funds with brand new GRMN positions are Dmitry Balyasny’s Balyasny Asset Management, Jinghua Yan’s TwinBeech Capital, and Jack Ripsteen’s Potrero Capital Research.
Let’s go over hedge fund activity in other stocks similar to Garmin Ltd. (NASDAQ:GRMN). These stocks are Telefonica S.A. (NYSE:TEF), EPAM Systems Inc (NYSE:EPAM), Maxim Integrated Products Inc. (NASDAQ:MXIM), Akamai Technologies, Inc. (NASDAQ:AKAM), The Cooper Companies, Inc. (NYSE:COO), Vulcan Materials Company (NYSE:VMC), and Palantir Technologies Inc. (NYSE:PLTR). This group of stocks’ market values resemble GRMN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEF | 5 | 6896 | -1 |
| EPAM | 33 | 574847 | 5 |
| MXIM | 52 | 1964354 | 19 |
| AKAM | 40 | 441271 | 0 |
| COO | 30 | 1218371 | -4 |
| VMC | 42 | 1331465 | -9 |
| PLTR | 31 | 643387 | 31 |
| Average | 33.3 | 882942 | 5.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $883 million. That figure was $515 million in GRMN’s case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 5 bullish hedge fund positions. Garmin Ltd. (NASDAQ:GRMN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GRMN is 68.7. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on GRMN as the stock returned 26.6% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
