Was The Smart Money Right About Generac Holdings Inc. (GNRC)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Generac Holdings Inc. (NYSE:GNRC) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Generac Holdings Inc. (NYSE:GNRC) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. GNRC shareholders have witnessed an increase in support from the world’s most elite money managers of late. There were 38 hedge funds in our database with GNRC holdings at the end of June. Our calculations also showed that GNRC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to analyze the fresh hedge fund action surrounding Generac Holdings Inc. (NYSE:GNRC).

Mark Kingdon of Kingdon Capital

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

At third quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GNRC over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Impax Asset Management held the most valuable stake in Generac Holdings Inc. (NYSE:GNRC), which was worth $228.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $151.5 million worth of shares. AQR Capital Management, Electron Capital Partners, and Arrowstreet Capital 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 Precept Capital Management allocated the biggest weight to Generac Holdings Inc. (NYSE:GNRC), around 3.81% of its 13F portfolio. Electron Capital Partners is also relatively very bullish on the stock, designating 3.05 percent of its 13F equity portfolio to GNRC.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Encompass Capital Advisors, managed by Todd J. Kantor, assembled the biggest position in Generac Holdings Inc. (NYSE:GNRC). Encompass Capital Advisors had $26 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also initiated a $12.3 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Jay Genzer’s Thames Capital Management, and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Generac Holdings Inc. (NYSE:GNRC) but similarly valued. These stocks are Consolidated Edison, Inc. (NYSE:ED), Albemarle Corporation (NYSE:ALB), ViacomCBS Inc. (NASDAQ:VIAC), Canon Inc. (NYSE:CAJ), Carvana Co. (NYSE:CVNA), Gartner Inc (NYSE:IT), and United Rentals, Inc. (NYSE:URI). This group of stocks’ market values match GNRC’s market value.

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As you can see these stocks had an average of 37.4 hedge funds with bullish positions and the average amount invested in these stocks was $1962 million. That figure was $725 million in GNRC’s case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 8 bullish hedge fund positions. Generac Holdings Inc. (NYSE:GNRC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GNRC is 60.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, GNRC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GNRC were disappointed as the stock returned -30.9% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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