Is Genpact Limited (NYSE:G) undervalued? Investors who are in the know are in a bearish mood. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience
To most investors, hedge funds are viewed as slow, old investment tools of years past. While there are more than 8000 funds in operation at present, we at Insider Monkey hone in on the aristocrats of this group, close to 450 funds. It is widely believed that this group controls the majority of the smart money’s total asset base, and by tracking their highest performing equity investments, we have found a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as key, bullish insider trading sentiment is another way to parse down the world of equities. Just as you’d expect, there are a variety of reasons for a corporate insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this strategy if you know where to look (learn more here).
With all of this in mind, it’s important to take a gander at the key action surrounding Genpact Limited (NYSE:G).
Hedge fund activity in Genpact Limited (NYSE:G)
At the end of the first quarter, a total of 17 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.
When looking at the hedgies we track, Eminence Capital, managed by Ricky Sandler, holds the most valuable position in Genpact Limited (NYSE:G). Eminence Capital has a $153.2 million position in the stock, comprising 4% of its 13F portfolio. The second largest stake is held by Emerging Sovereign Group, managed by J Kevin Kenny Jr, which held a $37.2 million position; 2.2% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Ken Griffin’s Citadel Investment Group, Chuck Royce’s Royce & Associates and Alok Agrawal’s Bloom Tree Partners.
Because Genpact Limited (NYSE:G) has faced falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers who were dropping their full holdings heading into Q2. Intriguingly, SAC Subsidiary’s Sigma Capital Management dropped the biggest investment of the “upper crust” of funds we key on, totaling close to $9.6 million in stock., and Jeffrey Vinik of Vinik Asset Management was right behind this move, as the fund sold off about $9.2 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Genpact Limited (NYSE:G)?
Insider purchases made by high-level executives is at its handiest when the company in focus has seen transactions within the past half-year. Over the latest 180-day time frame, Genpact Limited (NYSE:G) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Genpact Limited (NYSE:G). These stocks are FTI Consulting, Inc. (NYSE:FCN), Booz Allen Hamilton Holding Corporation (NYSE:BAH), The Corporate Executive Board Company (NYSE:CEB), Towers Watson & Co (NYSE:TW), and Corrections Corp Of America (NYSE:CXW). All of these stocks are in the management services industry and their market caps are closest to G’s market cap.