Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Gartner Inc (NYSE:IT) changed recently.
Gartner Inc (NYSE:IT) has experienced an increase in hedge fund interest lately. Gartner Inc (NYSE:IT) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 32 hedge funds in our database with IT holdings at the end of June. Our calculations also showed that IT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Blood of Generation Investment Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to view the new hedge fund action encompassing Gartner Inc (NYSE:IT).
Do Hedge Funds Think IT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in IT a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Generation Investment Management was the largest shareholder of Gartner Inc (NYSE:IT), with a stake worth $702.9 million reported as of the end of September. Trailing Generation Investment Management was Bares Capital Management, which amassed a stake valued at $296.2 million. Melvin Capital Management, Nitorum Capital, and D E Shaw 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 Nishkama Capital allocated the biggest weight to Gartner Inc (NYSE:IT), around 12% of its 13F portfolio. Bares Capital Management is also relatively very bullish on the stock, designating 6.25 percent of its 13F equity portfolio to IT.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Nitorum Capital, managed by Seth Rosen, initiated the most valuable position in Gartner Inc (NYSE:IT). Nitorum Capital had $38.6 million invested in the company at the end of the quarter. Qing Li’s Sciencast Management also initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are Hoon Kim’s Quantinno Capital, Ran Pang’s Quantamental Technologies, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Gartner Inc (NYSE:IT) but similarly valued. These stocks are Nordson Corporation (NASDAQ:NDSN), Guardant Health, Inc. (NASDAQ:GH), Kinross Gold Corporation (NYSE:KGC), Brookfield Property Partners LP (NASDAQ:BPY), Regions Financial Corporation (NYSE:RF), E*TRADE Financial Corporation (NASDAQ:ETFC), and Western Digital Corporation (NASDAQ:WDC). This group of stocks’ market caps are similar to IT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NDSN | 21 | 63950 | 0 |
| GH | 41 | 1094278 | 5 |
| KGC | 29 | 799959 | -1 |
| BPY | 8 | 18985 | 2 |
| RF | 23 | 192270 | -3 |
| ETFC | 40 | 1159200 | 4 |
| WDC | 39 | 641329 | -10 |
| Average | 28.7 | 567139 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $567 million. That figure was $1451 million in IT’s case. Guardant Health, Inc. (NASDAQ:GH) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NASDAQ:BPY) is the least popular one with only 8 bullish hedge fund positions. Gartner Inc (NYSE:IT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IT is 85.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on IT as the stock returned 26.4% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
