It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like The Gap Inc. (NYSE:GPS).
The Gap Inc. (NYSE:GPS) has experienced an increase in enthusiasm from smart money lately. At the end of this article we will also compare GPS to other stocks including Liberty Media Corp (NASDAQ:LMCK), Whirlpool Corporation (NYSE:WHR), and Equifax Inc. (NYSE:EFX) to get a better sense of its popularity.
Follow Gap Inc (NYSE:GAP)
Follow Gap Inc (NYSE:GAP)
Now, we’re going to view the new action surrounding The Gap Inc. (NYSE:GPS).
What does the smart money think about The Gap Inc. (NYSE:GPS)?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 62% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Glenview Capital, managed by Larry Robbins, holds the biggest position in The Gap Inc. (NYSE:GPS). Glenview Capital has a $150.9 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is ESL Investments, managed by Edward Lampert, which holds a $111.9 million position; 7.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions encompass Daniel S. Och’s OZ Management, Cliff Asness’s AQR Capital Management and Clint Carlson’s Carlson Capital.
Consequently, specific money managers were leading the bulls’ herd. OZ Management, managed by Daniel S. Och, initiated the most valuable position in The Gap Inc. (NYSE:GPS). OZ Management had $79.8 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $31.5 million position during the quarter. The following funds were also among the new GPS investors: Jim Simons’s Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Neil Chriss’s Hutchin Hill Capital.
Let’s also examine hedge fund activity in other stocks similar to The Gap Inc. (NYSE:GPS). We will take a look at Liberty Media Corp (NASDAQ:LMCK), Whirlpool Corporation (NYSE:WHR), Equifax Inc. (NYSE:EFX), and Tata Motors Limited (ADR) (NYSE:TTM). This group of stocks’ market valuations are closest to GPS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LMCK | 39 | 1943732 | 7 |
| WHR | 37 | 1866682 | 0 |
| EFX | 35 | 439297 | 6 |
| TTM | 22 | 431033 | 2 |
As you can see these stocks had an average of 33.25 hedge funds with bullish positions and the average amount invested in these stocks was $1,170 million. That figure was $773 million in GPS’s case. Liberty Media Corp (NASDAQ:LMCK) is the most popular stock in this table. On the other hand Tata Motors Limited (ADR) (NYSE:TTM) is the least popular one with only 22 bullish hedge fund positions. The Gap Inc. (NYSE:GPS) 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 LMCK might be a better candidate to consider a long position.
