We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of GNC Holdings Inc (NYSE:GNC) based on that data.
GNC Holdings Inc (NYSE:GNC) has seen a decrease in hedge fund sentiment in recent months. Our calculations also showed that GNC 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 58 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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 gander at the new hedge fund action regarding GNC Holdings Inc (NYSE:GNC).
What have hedge funds been doing with GNC Holdings Inc (NYSE:GNC)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -53% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in GNC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in GNC Holdings Inc (NYSE:GNC) was held by Renaissance Technologies, which reported holding $1 million worth of stock at the end of September. It was followed by Shah Capital Management with a $0.3 million position. Other investors bullish on the company included Citadel Investment Group, GAMCO Investors, and AQR Capital Management. In terms of the portfolio weights assigned to each position Shah Capital Management allocated the biggest weight to GNC Holdings Inc (NYSE:GNC), around 0.26% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, designating 0.003 percent of its 13F equity portfolio to GNC.
Due to the fact that GNC Holdings Inc (NYSE:GNC) has experienced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers that elected to cut their positions entirely heading into Q4. Intriguingly, Douglas Dethy’s DC Capital Partners dropped the largest position of the 750 funds watched by Insider Monkey, worth close to $4.1 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also said goodbye to its stock, about $3.6 million worth. These moves are interesting, as total hedge fund interest dropped by 8 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as GNC Holdings Inc (NYSE:GNC) but similarly valued. We will take a look at Manhattan Bridge Capital, Inc (NASDAQ:LOAN), AudioEye, Inc. (NASDAQ:AEYE), AMREP Corporation (NYSE:AXR), and Bogota Financial Corp. (NASDAQ:BSBK). This group of stocks’ market values are similar to GNC’s market value.
|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 1.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $2 million in GNC’s case. AudioEye, Inc. (NASDAQ:AEYE) is the most popular stock in this table. On the other hand Manhattan Bridge Capital, Inc (NASDAQ:LOAN) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks GNC Holdings Inc (NYSE:GNC) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on GNC as the stock returned 106.4% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.