GoPro Inc (NASDAQ:GPRO) shares have surged by more than 5% today after the company announced a deal with Red Bull, which will result in GoPro’s cameras being used by Red Bull to capture its 1,800 events over the next few years. Red Bull has also acquired an equity stake in GoPro, buying less than 1% of its class A shares. Both companies will capture and co-produce videos and live events and distribute them using their branded channels, including Red Bull TV, RedBull.com, and GoPro Channel. Both companies will share the content production and distribution rights for an undisclosed number of years. In a statement, GoPro founder and CEO Nicholas Woodman said that the partnership with Red Bull is strategic and will help the company to amplify its international reach.
GoPro Inc (NASDAQ:GPRO) shareholders have witnessed a decrease in hedge fund interest in recent months. Heading into the second quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 11% decline from one quarter earlier. 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 Sears Holdings Corporation (NASDAQ:SHLD), Imperva Inc (NYSE:IMPV), and Whiting Petroleum Corp (NYSE:WLL) to gather more data points.
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We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
Of the funds tracked by Insider Monkey, Cliff Asness’ AQR Capital Management has the largest position in GoPro Inc (NASDAQ:GPRO), worth close to $23.7 million, corresponding to less than 0.1% of its total 13F portfolio. Coming in second is Sageview Capital, managed by Edward Gilhuly and Scott Stuart, which holds a $20.3 million position; 11.4% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism comprise John Griffin’s Blue Ridge Capital, Jim Simons’s Renaissance Technologies, and Ken Griffin’s Citadel Investment Group.
On the next page we’ll look at some of the funds that were bearish on GoPro in Q1 and see how it compares in popularity to a few other stocks.
Judging by the fact that GoPro Inc (NASDAQ:GPRO) has faced a declination in interest from the smart money, logic holds that there was a specific group of money managers who were dropping their full holdings heading into Q2. Interestingly, John Lykouretzos’ Hoplite Capital Management dropped the biggest position of the 700 funds watched by Insider Monkey, totaling about $19.6 million in stock. Rob Citrone’s fund, Discovery Capital Management, also dropped its stock, about $14.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q2.
Let’s now take a look at hedge fund activity in other stocks similar to GoPro Inc (NASDAQ:GPRO). These stocks are Sears Holdings Corporation (NASDAQ:SHLD), Imperva Inc (NYSE:IMPV), Whiting Petroleum Corp (NYSE:WLL), and Euronav NV Ordinary Shares (NYSE:EURN). This group of stocks’ market caps resemble GPRO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHLD | 20 | 982013 | 0 |
| IMPV | 15 | 97310 | -15 |
| WLL | 43 | 303578 | 3 |
| EURN | 27 | 218487 | 5 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $400 million. That figure was $96 million in GPRO’s case. Whiting Petroleum Corp (NYSE:WLL) is the most popular stock in this table. On the other hand Imperva Inc (NYSE:IMPV) is the least popular one with only 15 bullish hedge fund positions. GoPro Inc (NASDAQ:GPRO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WLL might be a better candidate to consider a long position.
Disclosure: None
