In this article you are going to find out whether hedge funds think Genuine Parts Company (NYSE:GPC) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Genuine Parts Company (NYSE:GPC) the right investment to pursue these days? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund positions went up by 1 in recent months. Our calculations also showed that GPC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). GPC was in 22 hedge funds’ portfolios at the end of March. There were 21 hedge funds in our database with GPC holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are viewed as unimportant, outdated financial tools of the past. While there are more than 8000 funds with their doors open at the moment, Our researchers choose to focus on the moguls of this club, around 850 funds. These hedge fund managers orchestrate the majority of the hedge fund industry’s total capital, and by keeping track of their first-class stock picks, Insider Monkey has discovered numerous investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the fresh hedge fund action encompassing Genuine Parts Company (NYSE:GPC).
Hedge fund activity in Genuine Parts Company (NYSE:GPC)
Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GPC over the last 18 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, GAMCO Investors was the largest shareholder of Genuine Parts Company (NYSE:GPC), with a stake worth $75 million reported as of the end of September. Trailing GAMCO Investors was Holocene Advisors, which amassed a stake valued at $19 million. Balyasny Asset Management, Gotham Asset Management, and Citadel Investment Group 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 GAMCO Investors allocated the biggest weight to Genuine Parts Company (NYSE:GPC), around 0.89% of its 13F portfolio. Gotham Asset Management is also relatively very bullish on the stock, setting aside 0.31 percent of its 13F equity portfolio to GPC.
As industrywide interest jumped, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the largest position in Genuine Parts Company (NYSE:GPC). Balyasny Asset Management had $18.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $4.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, David Costen Haley’s HBK Investments, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks similar to Genuine Parts Company (NYSE:GPC). These stocks are Hasbro, Inc. (NASDAQ:HAS), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), Live Nation Entertainment, Inc. (NYSE:LYV), and Korea Electric Power Corporation (NYSE:KEP). This group of stocks’ market valuations are closest to GPC’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $584 million. That figure was $164 million in GPC’s case. Live Nation Entertainment, Inc. (NYSE:LYV) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 7 bullish hedge fund positions. Genuine Parts Company (NYSE:GPC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on GPC as the stock returned 32.6% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.