Should I Avoid Grupo Financiero Galicia S.A. (GGAL)?

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 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Grupo Financiero Galicia S.A. (NASDAQ:GGAL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Grupo Financiero Galicia S.A. (NASDAQ:GGAL) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 23. GGAL has experienced a decrease in hedge fund interest recently. There were 11 hedge funds in our database with GGAL positions at the end of the second quarter. Our calculations also showed that GGAL 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.

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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind let’s take a look at the key hedge fund action encompassing Grupo Financiero Galicia S.A. (NASDAQ:GGAL).

What have hedge funds been doing with Grupo Financiero Galicia S.A. (NASDAQ:GGAL)?

Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GGAL over the last 21 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.

More specifically, Discovery Capital Management was the largest shareholder of Grupo Financiero Galicia S.A. (NASDAQ:GGAL), with a stake worth $5.6 million reported as of the end of September. Trailing Discovery Capital Management was Arrowstreet Capital, which amassed a stake valued at $5 million. Millennium Management, Citadel Investment Group, and Citadel Investment Group 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 Discovery Capital Management allocated the biggest weight to Grupo Financiero Galicia S.A. (NASDAQ:GGAL), around 0.86% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to GGAL.

Judging by the fact that Grupo Financiero Galicia S.A. (NASDAQ:GGAL) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedgies that slashed their full holdings in the third quarter. At the top of the heap, Renaissance Technologies cut the biggest position of all the hedgies followed by Insider Monkey, totaling about $2.5 million in stock. Noam Gottesman’s fund, GLG Partners, also said goodbye to its stock, about $0.7 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Grupo Financiero Galicia S.A. (NASDAQ:GGAL). We will take a look at Intra-Cellular Therapies Inc (NASDAQ:ITCI), Sunoco LP (NYSE:SUN), BankUnited Inc (NYSE:BKU), Bank of Hawaii Corporation (NYSE:BOH), Ryman Hospitality Properties, Inc. (NYSE:RHP), American Equity Investment Life Holding Company (NYSE:AEL), and PacWest Bancorp (NASDAQ:PACW). All of these stocks’ market caps are similar to GGAL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $18 million in GGAL’s case. PacWest Bancorp (NASDAQ:PACW) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 6 bullish hedge fund positions. Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GGAL is 17. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on GGAL as the stock returned 27.4% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.

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