Is Group 1 Automotive, Inc. (GPI) A Good Stock To Buy?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Group 1 Automotive, Inc. (NYSE:GPI).

Is Group 1 Automotive, Inc. (NYSE:GPI) undervalued? Prominent investors are getting less optimistic. The number of bullish hedge fund bets fell by 1 recently. GPI was in 19 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with GPI holdings at the end of the previous quarter. At the end of this article we will also compare GPI to other stocks including Loral Space & Communications Ltd. (NASDAQ:LORL), Adeptus Health Inc (NYSE:ADPT), and Flow International Corporation (NASDAQ:FLOW) to get a better sense of its popularity.

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How are hedge funds trading Group 1 Automotive, Inc. (NYSE:GPI)?

At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 5% from the second quarter of 2016, as hedge fund ownership of the stock wallows around its yearly low point. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ricky Sandler’s Eminence Capital has the largest position in Group 1 Automotive, Inc. (NYSE:GPI), worth close to $115.7 million, accounting for 1.9% of its total 13F portfolio. On Eminence Capital’s heels is Phill Gross and Robert Atchinson of Adage Capital Management, with a $53.4 million position. Other members of the smart money with similar optimism encompass Anthony Bozza’s Lakewood Capital Management, Steven Richman’s East Side Capital (RR Partners), and Ken Griffin’s Citadel Investment Group.

Seeing as Group 1 Automotive, Inc. (NYSE:GPI) has witnessed a decline in interest from the smart money, we can see that there lies a certain “tier” of funds that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management sold off the biggest investment of all the hedgies followed by Insider Monkey, valued at an estimated $13.3 million in stock. Alexander Roepers’ fund, Atlantic Investment Management, also sold off its entire holding, about $2.8 million worth of GPI shares. These transactions are important to note, as aggregate hedge fund interest dropped by 1 fund by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to Group 1 Automotive, Inc. (NYSE:GPI). We will take a look at Loral Space & Communications Ltd. (NASDAQ:LORL), Adeptus Health Inc (NYSE:ADPT), Flow International Corporation (NASDAQ:FLOW), and Etsy Inc (NASDAQ:ETSY). This group of stocks’ market values resemble GPI’s market value.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $283 million in GPI’s case. Loral Space & Communications Ltd. (NASDAQ:LORL) is the most popular stock in this table. On the other hand Adeptus Health Inc (NYSE:ADPT) is the least popular one with only 13 bullish hedge fund positions. Group 1 Automotive, Inc. (NYSE:GPI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LORL might be a better candidate to consider a long position in.

Disclosure: None