Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Genpact Limited (NYSE:G)? The smart money sentiment can provide an answer to this question.
Genpact Limited (NYSE:G) investors should be aware of an increase in support from the world’s most elite money managers recently. Genpact Limited (NYSE:G) was in 24 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 38. There were 22 hedge funds in our database with G holdings at the end of June. Our calculations also showed that G isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Richard S. Pzena of Pzena Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to analyze the key hedge fund action encompassing Genpact Limited (NYSE:G).
Do Hedge Funds Think G Is A Good Stock To Buy Now?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in G over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Junto Capital Management held the most valuable stake in Genpact Limited (NYSE:G), which was worth $79.9 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $67.1 million worth of shares. Pzena Investment Management, Two Sigma Advisors, and Dalton Investments 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 Dalton Investments allocated the biggest weight to Genpact Limited (NYSE:G), around 10.93% of its 13F portfolio. Old Well Partners is also relatively very bullish on the stock, earmarking 3.75 percent of its 13F equity portfolio to G.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Fundsmith LLP, managed by Terry Smith, initiated the largest position in Genpact Limited (NYSE:G). Fundsmith LLP had $14.5 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $5.8 million position during the quarter. The other funds with brand new G positions are Dmitry Balyasny’s Balyasny Asset Management, Donald Sussman’s Paloma Partners, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s go over hedge fund activity in other stocks similar to Genpact Limited (NYSE:G). We will take a look at UGI Corp (NYSE:UGI), Lamb Weston Holdings, Inc. (NYSE:LW), Anaplan, Inc. (NYSE:PLAN), SiteOne Landscape Supply, Inc. (NYSE:SITE), Sibanye Stillwater Limited (NYSE:SBSW), Credicorp Ltd. (NYSE:BAP), and Owens Corning (NYSE:OC). This group of stocks’ market values are closest to G’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UGI | 20 | 128595 | -3 |
| LW | 31 | 426705 | -5 |
| PLAN | 61 | 2812127 | 9 |
| SITE | 15 | 120291 | -10 |
| SBSW | 9 | 141727 | -6 |
| BAP | 15 | 188052 | -4 |
| OC | 24 | 453991 | -10 |
| Average | 25 | 610213 | -4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $610 million. That figure was $299 million in G’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Sibanye Stillwater Limited (NYSE:SBSW) is the least popular one with only 9 bullish hedge fund positions. Genpact Limited (NYSE:G) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for G is 40.4. 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 negative signal and 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately G wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); G investors were disappointed as the stock returned 6.5% since the end of September (through 12/9) 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 most of these stocks already outperformed the market in 2021.
Follow Genpact Ltd (NYSE:G)
Follow Genpact Ltd (NYSE:G)
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Disclosure: None. This article was originally published at Insider Monkey.
