Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value 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 Garmin Ltd. (NASDAQ:GRMN) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Garmin Ltd. (NASDAQ:GRMN) investors should be aware of an increase in support from the world’s most elite money managers in recent months. Garmin Ltd. (NASDAQ:GRMN) was in 30 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 32. There were 25 hedge funds in our database with GRMN positions at the end of the second quarter. Our calculations also showed that GRMN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Dmitry Balyasny of Balyasny Asset Management
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 let’s take a gander at the recent hedge fund action regarding Garmin Ltd. (NASDAQ:GRMN).
Do Hedge Funds Think GRMN Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in GRMN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the number one position in Garmin Ltd. (NASDAQ:GRMN), worth close to $158.3 million, corresponding to 0.3% of its total 13F portfolio. The second largest stake is held by Robert Joseph Caruso of Select Equity Group, with a $59.3 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish encompass Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Socorro Asset Management allocated the biggest weight to Garmin Ltd. (NASDAQ:GRMN), around 3.24% of its 13F portfolio. Potrero Capital Research is also relatively very bullish on the stock, designating 2.02 percent of its 13F equity portfolio to GRMN.
As aggregate interest increased, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Garmin Ltd. (NASDAQ:GRMN). Balyasny Asset Management had $7 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $4.5 million position during the quarter. The other funds with brand new GRMN positions are Mika Toikka’s AlphaCrest Capital Management, Steve Cohen’s Point72 Asset Management, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s now take a look at hedge fund activity in other stocks similar to Garmin Ltd. (NASDAQ:GRMN). We will take a look at TELUS Corporation (NYSE:TU), Paycom Software Inc (NYSE:PAYC), ANSYS, Inc. (NASDAQ:ANSS), Fastenal Company (NASDAQ:FAST), ArcelorMittal (NYSE:MT), Ecopetrol S.A. (NYSE:EC), and Ball Corporation (NYSE:BLL). This group of stocks’ market valuations match GRMN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TU | 12 | 141291 | -1 |
| PAYC | 40 | 1424558 | 1 |
| ANSS | 38 | 1493156 | -8 |
| FAST | 30 | 609114 | 5 |
| MT | 20 | 1012692 | -2 |
| EC | 6 | 64885 | 0 |
| BLL | 27 | 1457074 | -17 |
| Average | 24.7 | 886110 | -3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $886 million. That figure was $465 million in GRMN’s case. Paycom Software Inc (NYSE:PAYC) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 6 bullish hedge fund positions. Garmin Ltd. (NASDAQ:GRMN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GRMN is 73.4. 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, GRMN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GRMN were disappointed as the stock returned -20% 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.
