Hedge Funds Aren’t Crazy About Graco Inc. (GGG) Anymore

With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Graco Inc. (NYSE:GGG).

Graco Inc. (NYSE:GGG) has experienced a decrease in hedge fund sentiment of late. Graco Inc. (NYSE:GGG) was in 24 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 32. Our calculations also showed that GGG 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to go over the new hedge fund action regarding Graco Inc. (NYSE:GGG).

Do Hedge Funds Think GGG Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. On the other hand, there were a total of 32 hedge funds with a bullish position in GGG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Mario Gabelli’s GAMCO Investors has the biggest position in Graco Inc. (NYSE:GGG), worth close to $89.7 million, corresponding to 0.8% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $67.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions include Renaissance Technologies, Jeremy Hosking’s Hosking Partners and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Graco Inc. (NYSE:GGG), around 0.76% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.41 percent of its 13F equity portfolio to GGG.

Because Graco Inc. (NYSE:GGG) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few hedge funds that elected to cut their entire stakes heading into Q3. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $10.2 million in stock. Michael Hintze’s fund, CQS Cayman LP, also said goodbye to its stock, about $8.4 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds heading into Q3.

Let’s now review hedge fund activity in other stocks similar to Graco Inc. (NYSE:GGG). These stocks are DaVita Inc (NYSE:DVA), The Interpublic Group of Companies Inc (NYSE:IPG), Nordson Corporation (NASDAQ:NDSN), Vail Resorts, Inc. (NYSE:MTN), The Gap Inc. (NYSE:GPS), FactSet Research Systems Inc. (NYSE:FDS), and Quanta Services Inc (NYSE:PWR). This group of stocks’ market caps resemble GGG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.4 hedge funds with bullish positions and the average amount invested in these stocks was $1332 million. That figure was $255 million in GGG’s case. The Gap Inc. (NYSE:GPS) is the most popular stock in this table. On the other hand FactSet Research Systems Inc. (NYSE:FDS) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Graco Inc. (NYSE:GGG) is even less popular than FDS. Our overall hedge fund sentiment score for GGG is 26.5. 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. Hedge funds dodged a bullet by taking a bearish stance towards GGG. Our calculations showed that the top 5 most popular hedge fund stocks 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 but managed to beat the market again by 1.6 percentage points. Unfortunately GGG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); GGG investors were disappointed as the stock returned 0.2% since the end of the second quarter (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 since 2019.

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