Group 1 Automotive, Inc. (GPI): Are Hedge Funds Right About This Stock?

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Should Group 1 Automotive, Inc. (NYSE:GPI) investors track the following data?

In the financial world, there are tons of methods market participants can use to analyze Mr. Market. Some of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the market by a very impressive margin (see just how much).

Just as necessary, optimistic insider trading sentiment is a second way to analyze the financial markets. There are many incentives for an upper level exec to downsize shares of his or her company, but just one, very simple reason why they would buy. Various academic studies have demonstrated the market-beating potential of this tactic if “monkeys” know where to look (learn more here).

What’s more, let’s discuss the recent info surrounding Group 1 Automotive, Inc. (NYSE:GPI).

Group 1 Automotive, Inc. (NYSE:GPI).

How have hedgies been trading Group 1 Automotive, Inc. (NYSE:GPI)?

At Q2’s end, a total of 16 of the hedge funds we track held long positions in this stock, a change of -20% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly.

Out of the hedge funds we follow, Phill Gross and Robert Atchinson’s Adage Capital Management had the largest position in Group 1 Automotive, Inc. (NYSE:GPI), worth close to $69.4 million, accounting for 0.2% of its total 13F portfolio. On Adage Capital Management’s heels is Eminence Capital, managed by Ricky Sandler, which held a $47.8 million position; 1.2% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include Clint Carlson’s Carlson Capital, Patrick McCormack’s Tiger Consumer Management and John Murphy’s Alydar Capital.

Judging by the fact that Group 1 Automotive, Inc. (NYSE:GPI) has experienced a fall in interest from upper-tier hedge fund managers, it’s easy to see that there exists a select few hedge funds that elected to cut their entire stakes in Q1. It’s worth mentioning that Ryan Heslop and Ariel Warszawski’s Firefly Value Partners dumped the largest position of the “upper crust” of funds we key on, worth an estimated $24.9 million in stock. Andrew Feldstein and Stephen Siderow’s fund, Blue Mountain Capital, also dropped its stock, about $17.3 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds in Q1.

How are insiders trading Group 1 Automotive, Inc. (NYSE:GPI)?

Insider buying is best served when the primary stock in question has experienced transactions within the past six months. Over the last half-year time frame, Group 1 Automotive, Inc. (NYSE:GPI) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Group 1 Automotive, Inc. (NYSE:GPI). These stocks are Penske Automotive Group, Inc. (NYSE:PAG), KAR Auction Services Inc (NYSE:KAR), Asbury Automotive Group, Inc. (NYSE:ABG), Lithia Motors Inc (NYSE:LAD), and Sonic Automotive Inc (NYSE:SAH). All of these stocks are in the auto dealerships industry and their market caps are similar to GPI’s market cap.

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