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Hedge Funds Are Dumping Gores Metropoulos, Inc. (GMHI)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Gores Metropoulos, Inc. (NASDAQ:GMHI) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Gores Metropoulos, Inc. (NASDAQ:GMHI) shareholders have witnessed a decrease in hedge fund interest lately. GMHI was in 19 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with GMHI holdings at the end of the previous quarter. Our calculations also showed that GMHI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jeffrey Talpins of Element Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to check out the key hedge fund action regarding Gores Metropoulos, Inc. (NASDAQ:GMHI).

How are hedge funds trading Gores Metropoulos, Inc. (NASDAQ:GMHI)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in GMHI over the last 17 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Among these funds, Millennium Management held the most valuable stake in Gores Metropoulos, Inc. (NASDAQ:GMHI), which was worth $20.4 million at the end of the third quarter. On the second spot was Arrowgrass Capital Partners which amassed $20.2 million worth of shares. Governors Lane, Element Capital Management, and Magnetar Capital 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 Governors Lane allocated the biggest weight to Gores Metropoulos, Inc. (NASDAQ:GMHI), around 2.69% of its 13F portfolio. Element Capital Management is also relatively very bullish on the stock, dishing out 1.66 percent of its 13F equity portfolio to GMHI.

Judging by the fact that Gores Metropoulos, Inc. (NASDAQ:GMHI) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds that slashed their full holdings heading into Q4. It’s worth mentioning that Nick Niell’s Arrowgrass Capital Partners sold off the biggest stake of all the hedgies tracked by Insider Monkey, totaling an estimated $20.9 million in stock. Andrew Weiss’s fund, Weiss Asset Management, also cut its stock, about $1.6 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Gores Metropoulos, Inc. (NASDAQ:GMHI) but similarly valued. We will take a look at Blue Bird Corporation (NASDAQ:BLBD), Sunlands Technology Group (NYSE:STG), Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), and TransMedics Group, Inc. (NASDAQ:TMDX). This group of stocks’ market values are similar to GMHI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BLBD 7 57343 2
STG 1 885 0
ACHN 18 82556 4
TMDX 4 94901 -3
Average 7.5 58921 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $163 million in GMHI’s case. Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) is the most popular stock in this table. On the other hand Sunlands Technology Group (NYSE:STG) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Gores Metropoulos, Inc. (NASDAQ:GMHI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GMHI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GMHI were disappointed as the stock returned 0.2% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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