Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards GoPro Inc (NASDAQ:GPRO) at the end of the third quarter and determine whether the smart money was really smart about this stock.
GoPro Inc (NASDAQ:GPRO) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 36. GPRO investors should pay attention to an increase in enthusiasm from smart money of late. There were 28 hedge funds in our database with GPRO holdings at the end of June. Our calculations also showed that GPRO 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. With all of this in mind we’re going to take a look at the key hedge fund action surrounding GoPro Inc (NASDAQ:GPRO).
David Einhorn of Greenlight Capital
Do Hedge Funds Think GPRO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GPRO over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Prentice Capital Management was the largest shareholder of GoPro Inc (NASDAQ:GPRO), with a stake worth $63.9 million reported as of the end of September. Trailing Prentice Capital Management was D E Shaw, which amassed a stake valued at $46.4 million. Iridian Asset Management, Greenlight Capital, 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 Prentice Capital Management allocated the biggest weight to GoPro Inc (NASDAQ:GPRO), around 16.15% of its 13F portfolio. Greenlight Capital is also relatively very bullish on the stock, designating 2.3 percent of its 13F equity portfolio to GPRO.
As aggregate interest increased, some big names have jumped into GoPro Inc (NASDAQ:GPRO) headfirst. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), established the largest position in GoPro Inc (NASDAQ:GPRO). Schonfeld Strategic Advisors had $2.7 million invested in the company at the end of the quarter. Mika Toikka’s AlphaCrest Capital Management also initiated a $1.2 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Peter Algert’s Algert Global, and Donald Sussman’s Paloma Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as GoPro Inc (NASDAQ:GPRO) but similarly valued. These stocks are Omega Flex, Inc. (NASDAQ:OFLX), IronNet Inc. (NYSE:IRNT), Steelcase Inc. (NYSE:SCS), Kronos Worldwide, Inc. (NYSE:KRO), Caribou Biosciences Inc. (NASDAQ:CRBU), Global Industrial Company (NYSE:GIC), and MGP Ingredients Inc (NASDAQ:MGPI). This group of stocks’ market valuations are closest to GPRO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OFLX | 3 | 4517 | 0 |
| IRNT | 13 | 45219 | 11 |
| SCS | 12 | 114546 | -4 |
| KRO | 12 | 19947 | 1 |
| CRBU | 26 | 297861 | 26 |
| GIC | 11 | 34388 | 0 |
| MGPI | 13 | 32105 | -1 |
| Average | 12.9 | 78369 | 4.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $293 million in GPRO’s case. Caribou Biosciences Inc. (NASDAQ:CRBU) is the most popular stock in this table. On the other hand Omega Flex, Inc. (NASDAQ:OFLX) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks GoPro Inc (NASDAQ:GPRO) is more popular among hedge funds. Our overall hedge fund sentiment score for GPRO is 83.8. 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 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 still beat the market by 3.6 percentage points. Unfortunately, GPRO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GPRO were disappointed as the stock returned -5.3% since the end of the third quarter (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.
Follow Gopro Inc. (NASDAQ:GPRO)
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Disclosure: None. This article was originally published at Insider Monkey.
