Is IT Stock A Buy or Sell?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Gartner Inc (NYSE:IT) to find out whether there were any major changes in hedge funds’ views.

Is IT stock a buy? Gartner Inc (NYSE:IT) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. Gartner Inc (NYSE:IT) was in 37 hedge funds’ portfolios at the end of December. The all time high for this statistic is 38. Our calculations also showed that IT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

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. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Gartner Inc (NYSE:IT).

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

At the end of December, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards IT over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Gartner Inc (NYSE:IT) was held by Generation Investment Management, which reported holding $867.9 million worth of stock at the end of December. It was followed by Bares Capital Management with a $386.4 million position. Other investors bullish on the company included Melvin Capital Management, Junto Capital Management, and Nitorum Capital. In terms of the portfolio weights assigned to each position Bares Capital Management allocated the biggest weight to Gartner Inc (NYSE:IT), around 7.15% of its 13F portfolio. Nishkama Capital is also relatively very bullish on the stock, dishing out 5.78 percent of its 13F equity portfolio to IT.

Since Gartner Inc (NYSE:IT) has faced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few money managers who sold off their entire stakes last quarter. At the top of the heap, Joe Milano’s Greenhouse Funds dumped the largest investment of all the hedgies monitored by Insider Monkey, comprising about $7.4 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dumped its stock, about $6.8 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Gartner Inc (NYSE:IT) but similarly valued. These stocks are Generac Holdings Inc. (NYSE:GNRC), Markel Corporation (NYSE:MKL), Tradeweb Markets Inc. (NASDAQ:TW), Jacobs Engineering Group Inc. (NYSE:J), Plug Power, Inc. (NASDAQ:PLUG), Avangrid, Inc. (NYSE:AGR), and Cincinnati Financial Corporation (NASDAQ:CINF). This group of stocks’ market valuations resemble IT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $645 million. That figure was $1940 million in IT’s case. Markel Corporation (NYSE:MKL) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Gartner Inc (NYSE:IT) is more popular among hedge funds. Our overall hedge fund sentiment score for IT is 83.2. 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 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 returned 7.9% in 2021 through April 1st but still managed to beat the market by 0.4 percentage points. Hedge funds were also right about betting on IT as the stock returned 16.9% since the end of December (through 4/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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