In this article we will check out the progression of hedge fund sentiment towards GrowGeneration Corp. (NASDAQ:GRWG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
GrowGeneration Corp. (NASDAQ:GRWG) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds’ portfolios at the end of March. Our calculations also showed that GRWG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as NovaGold Resources Inc. (NYSE:NG), American National Group Inc. (NASDAQ:ANAT), and Matson Inc. (NYSE:MATX) to gather more data points.
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Dmitry Balyasny of Balyasny Asset Management
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Do Hedge Funds Think GRWG Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GRWG over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Driehaus Capital was the largest shareholder of GrowGeneration Corp. (NASDAQ:GRWG), with a stake worth $65 million reported as of the end of March. Trailing Driehaus Capital was Citadel Investment Group, which amassed a stake valued at $19.2 million. Marshall Wace LLP, Balyasny Asset Management, 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 Stormborn Capital Management allocated the biggest weight to GrowGeneration Corp. (NASDAQ:GRWG), around 2.08% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, earmarking 0.96 percent of its 13F equity portfolio to GRWG.
Due to the fact that GrowGeneration Corp. (NASDAQ:GRWG) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers that elected to cut their entire stakes heading into Q2. Intriguingly, Frank Fu’s CaaS Capital said goodbye to the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $4 million in stock, and Matthew L Pinz’s Pinz Capital was right behind this move, as the fund sold off about $3.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as GrowGeneration Corp. (NASDAQ:GRWG) but similarly valued. We will take a look at NovaGold Resources Inc. (NYSE:NG), American National Group Inc. (NASDAQ:ANAT), Matson Inc. (NYSE:MATX), Perpetua Resources Corp. (NASDAQ:PPTA), Opko Health Inc. (NYSE:OPK), AeroVironment, Inc. (NASDAQ:AVAV), and Stepan Company (NYSE:SCL). All of these stocks’ market caps are similar to GRWG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NG | 15 | 310029 | -3 |
| ANAT | 11 | 55978 | -2 |
| MATX | 19 | 32004 | 5 |
| PPTA | 3 | 167659 | 3 |
| OPK | 15 | 29181 | -1 |
| AVAV | 16 | 137175 | 0 |
| SCL | 10 | 28771 | -2 |
| Average | 12.7 | 108685 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $127 million in GRWG’s case. Matson Inc. (NYSE:MATX) is the most popular stock in this table. On the other hand Perpetua Resources Corp. (NASDAQ:PPTA) is the least popular one with only 3 bullish hedge fund positions. GrowGeneration Corp. (NASDAQ:GRWG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GRWG is 81.9. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately GRWG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GRWG were disappointed as the stock returned -19.7% since the end of March (through 7/23) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
