A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Gates Industrial Corporation plc (NYSE:GTES).
Is Gates Industrial Corporation plc (NYSE:GTES) a buy here? The best stock pickers were becoming hopeful. The number of bullish hedge fund positions rose by 1 recently. Gates Industrial Corporation plc (NYSE:GTES) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GTES isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Israel Englander of Millennium Management
With all of this in mind we’re going to review the latest hedge fund action regarding Gates Industrial Corporation plc (NYSE:GTES).
Do Hedge Funds Think GTES Is A Good Stock To Buy Now?
At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the first quarter of 2020. On the other hand, there were a total of 10 hedge funds with a bullish position in GTES a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Driehaus Capital held the most valuable stake in Gates Industrial Corporation plc (NYSE:GTES), which was worth $21.5 million at the end of the second quarter. On the second spot was Millennium Management which amassed $15 million worth of shares. Impax Asset Management, Renaissance Technologies, and Two Sigma Advisors 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 Driehaus Capital allocated the biggest weight to Gates Industrial Corporation plc (NYSE:GTES), around 0.28% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to GTES.
Consequently, some big names have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Gates Industrial Corporation plc (NYSE:GTES). Marshall Wace LLP had $1.6 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also made a $1.4 million investment in the stock during the quarter. The other funds with brand new GTES positions are Paul Tudor Jones’s Tudor Investment Corp, Noam Gottesman’s GLG Partners, and Peter Muller’s PDT Partners.
Let’s check out hedge fund activity in other stocks similar to Gates Industrial Corporation plc (NYSE:GTES). We will take a look at Glacier Bancorp, Inc. (NASDAQ:GBCI), Inspire Medical Systems, Inc. (NYSE:INSP), Flowserve Corporation (NYSE:FLS), Allegro MicroSystems, Inc. (NASDAQ:ALGM), 51job, Inc. (NASDAQ:JOBS), Virtu Financial Inc (NASDAQ:VIRT), and nVent Electric plc (NYSE:NVT). This group of stocks’ market values match GTES’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GBCI | 11 | 51205 | -5 |
| INSP | 32 | 544165 | 4 |
| FLS | 27 | 234192 | -2 |
| ALGM | 17 | 74844 | 0 |
| JOBS | 18 | 556158 | 0 |
| VIRT | 22 | 268818 | 0 |
| NVT | 30 | 401330 | -1 |
| Average | 22.4 | 304387 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $304 million. That figure was $89 million in GTES’s case. Inspire Medical Systems, Inc. (NYSE:INSP) is the most popular stock in this table. On the other hand Glacier Bancorp, Inc. (NASDAQ:GBCI) is the least popular one with only 11 bullish hedge fund positions. Gates Industrial Corporation plc (NYSE:GTES) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GTES is 55. 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately GTES wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GTES investors were disappointed as the stock returned -7.1% since the end of June (through 10/22) 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 Gates Industrial Corp Plc (NYSE:GTES)
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Disclosure: None. This article was originally published at Insider Monkey.
