Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Gentex Corporation (NASDAQ:GNTX) was in 26 hedge funds’ portfolios at the end of the third quarter of 2015. GNTX has seen a decrease in hedge fund interest in recent months. There were 26 hedge funds in our database with GNTX holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Pandora Media Inc (NYSE:P), FMC Corp (NYSE:FMC), and Avis Budget Group Inc. (NASDAQ:CAR) to gather more data points.
What does the smart money think about Gentex Corporation (NASDAQ:GNTX)?
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Gentex Corporation (NASDAQ:GNTX), worth close to $99.7 million, comprising 0.5% of its total 13F portfolio. The second most bullish hedge fund manager is Joel Greenblatt of Gotham Asset Management, with a $27.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism encompass D. E. Shaw’s D E Shaw, Phill Gross and Robert Atchinson’s Adage Capital Management and Legg Mason Capital Management.
Due to the fact that Gentex Corporation (NASDAQ:GNTX) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of money managers that elected to cut their full holdings in third quarter. At the top of the heap, Neil Chriss’s Hutchin Hill Capital cut the biggest stake of the “upper crust” of funds tracked by Insider Monkey, valued at about $3.1 million in stock. Peter Muller’s fund, PDT Partners, also dumped its stock, about $1.5 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Gentex Corporation (NASDAQ:GNTX). We will take a look at Pandora Media Inc (NYSE:P), FMC Corp (NYSE:FMC), Avis Budget Group Inc. (NASDAQ:CAR), and Northstar Realty Finance Corp. (NYSE:NRF). All of these stocks’ market caps match GNTX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $1486 million. Northstar Realty Finance Corp. (NYSE:NRF) is the most popular stock in this table. On the other hand FMC Corp (NYSE:FMC) is the least popular one with only 33 bullish hedge fund positions. Compared to these stocks Gentex Corporation (NASDAQ:GNTX) is even less popular than FMC. Considering that hedge funds aren’t fond of this stock, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.