Were Expert Investors Right About The Goldman Sachs Group, Inc. (GS)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards The Goldman Sachs Group, Inc. (NYSE:GS) and determine whether hedge funds skillfully traded this stock.

The Goldman Sachs Group, Inc. (NYSE:GS) has seen an increase in activity from the world’s largest hedge funds of late. The Goldman Sachs Group, Inc. (NYSE:GS) was in 74 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 78. Our calculations also showed that GS 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. Now we’re going to go over the latest hedge fund action encompassing The Goldman Sachs Group, Inc. (NYSE:GS).

Boykin Curry of Eagle Capital

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

At Q3’s end, a total of 74 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in GS over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

More specifically, Eagle Capital Management was the largest shareholder of The Goldman Sachs Group, Inc. (NYSE:GS), with a stake worth $1386.9 million reported as of the end of September. Trailing Eagle Capital Management was Fisher Asset Management, which amassed a stake valued at $1069 million. Greenhaven Associates, Citadel Investment Group, and Balyasny Asset Management 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 Greenhaven Associates allocated the biggest weight to The Goldman Sachs Group, Inc. (NYSE:GS), around 25.4% of its 13F portfolio. Truvvo Partners is also relatively very bullish on the stock, dishing out 8.64 percent of its 13F equity portfolio to GS.

Consequently, some big names were breaking ground themselves. Renaissance Technologies, initiated the most outsized position in The Goldman Sachs Group, Inc. (NYSE:GS). Renaissance Technologies had $120.9 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $81.5 million position during the quarter. The other funds with brand new GS positions are Daniel Johnson’s Gillson Capital, Steve Cohen’s Point72 Asset Management, and Morris Mark’s Mark Asset Management.

Let’s now review hedge fund activity in other stocks similar to The Goldman Sachs Group, Inc. (NYSE:GS). We will take a look at TotalEnergies SE (NYSE:TTE), Advanced Micro Devices, Inc. (NASDAQ:AMD), International Business Machines Corp. (NYSE:IBM), ServiceNow Inc (NYSE:NOW), Sanofi (NASDAQ:SNY), American Tower Corporation (NYSE:AMT), and Amgen, Inc. (NASDAQ:AMGN). This group of stocks’ market values match GS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 48.7 hedge funds with bullish positions and the average amount invested in these stocks was $3257 million. That figure was $5452 million in GS’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand TotalEnergies SE (NYSE:TTE) is the least popular one with only 16 bullish hedge fund positions. The Goldman Sachs Group, Inc. (NYSE:GS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GS is 79.3. 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, GS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GS were disappointed as the stock returned -5.7% 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.