Should You Avoid Gartner Inc (IT)?

At Insider Monkey we follow around 740 of the top investors and even though many of them underperformed the raging bull market, the history teaches us that over the long-run they still manage to beat the market after adjusting for risk, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following their best picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

In this article, we are going to take a closer look at the hedge fund sentiment towards Gartner Inc (NYSE:IT). The company registered a decline in popularity during the third quarter, as the number of funds tracked by Insider Monkey long the stock declined by two to 20. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Mid America Apartment Communities Inc (NYSE:MAA), Scripps Networks Interactive, Inc. (NYSE:SNI), and Darden Restaurants, Inc. (NYSE:DRI) to gather more data points.

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How are hedge funds trading Gartner Inc (NYSE:IT)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by  9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards IT over the last five quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Brian Bares’ Bares Capital Management has the largest position in Gartner Inc (NYSE:IT), worth close to $111.9 million, amounting to 6.7% of its total 13F portfolio. Coming in second is Select Equity Group, led by Robert Joseph Caruso, which holds a $65.8 million position. Some other members of the smart money that are bullish consist of Chuck Royce’s Royce & Associates, Jim Simons’ Renaissance Technologies and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Due to the fact that Gartner Inc (NYSE:IT) has experienced declining sentiment from the smart money, we can see that there was a specific group of hedge funds who were dropping their entire stakes in the third quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP cashed in the biggest investment of the 700 funds watched by Insider Monkey, comprising an estimated $9.2 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund said goodbye to about $7.6 million worth of shares.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Gartner Inc (NYSE:IT) but similarly valued. These stocks are Mid America Apartment Communities Inc (NYSE:MAA), Scripps Networks Interactive, Inc. (NYSE:SNI), Darden Restaurants, Inc. (NYSE:DRI), and Garmin Ltd. (NASDAQ:GRMN). This group of stocks’ market caps match IT’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $468 million. That figure was $352 million in IT’s case. Darden Restaurants, Inc. (NYSE:DRI) is the most popular stock in this table. On the other hand Mid America Apartment Communities Inc (NYSE:MAA) is the least popular one with only 15 bullish hedge fund positions. Gartner Inc (NYSE:IT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Darden Restaurants, Inc. (NYSE:DRI) might be a better candidate to consider taking a long position in.

Disclosure: None