Generac Holdings Inc. (GNRC): Are Hedge Funds Right About This Stock?

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Is Generac Holdings Inc. (NYSE:GNRC) ready to rally soon? Investors who are in the know are becoming more confident. The number of bullish hedge fund positions went up by 3 in recent months.

To most market participants, hedge funds are perceived as unimportant, outdated investment tools of years past. While there are over 8000 funds in operation at the moment, we at Insider Monkey look at the moguls of this group, around 450 funds. Most estimates calculate that this group oversees most of the smart money’s total asset base, and by watching their best equity investments, we have brought to light a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Generac Holdings Inc. (NYSE:GNRC)Equally as integral, bullish insider trading sentiment is a second way to parse down the investments you’re interested in. Just as you’d expect, there are lots of incentives for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this tactic if “monkeys” understand where to look (learn more here).

Now, we’re going to take a glance at the recent action encompassing Generac Holdings Inc. (NYSE:GNRC).

How have hedgies been trading Generac Holdings Inc. (NYSE:GNRC)?

In preparation for this quarter, a total of 20 of the hedge funds we track were bullish in this stock, a change of 18% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully.

According to our comprehensive database, Andrew Sandler’s Sandler Capital Management had the largest position in Generac Holdings Inc. (NYSE:GNRC), worth close to $72.3 million, accounting for 2.1% of its total 13F portfolio. The second largest stake is held by SAC Subsidiary of CR Intrinsic Investors, with a $18.7 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Paul Tudor Jones’s Tudor Investment Corp and Matthew Hulsizer’s PEAK6 Capital Management.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Pine River Capital Management, managed by Brian Taylor, initiated the most valuable position in Generac Holdings Inc. (NYSE:GNRC). Pine River Capital Management had 3.5 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $2.9 million position during the quarter. The other funds with new positions in the stock are Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Mike Vranos’s Ellington, and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

Insider trading activity in Generac Holdings Inc. (NYSE:GNRC)

Bullish insider trading is at its handiest when the company in focus has seen transactions within the past half-year. Over the last six-month time frame, Generac Holdings Inc. (NYSE:GNRC) has experienced zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Generac Holdings Inc. (NYSE:GNRC). These stocks are Sauer-Danfoss Inc. (NYSE:SHS), ITT Corp (NYSE:ITT), Actuant Corporation (NYSE:ATU), and Zebra Technologies Corp. (NASDAQ:ZBRA). This group of stocks belong to the diversified machinery industry and their market caps resemble GNRC’s market cap.

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