Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 6 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of GNC Holdings Inc (NYSE:GNC).
Hedge fund interest in GNC Holdings Inc (NYSE:GNC) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare GNC to other stocks including Bankwell Financial Group, Inc. (NASDAQ:BWFG), Gladstone Land Corporation (NASDAQ:LAND), and LCNB Corp. (NASDAQ:LCNB) to get a better sense of its popularity.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s review the fresh hedge fund action surrounding GNC Holdings Inc (NYSE:GNC).
How are hedge funds trading GNC Holdings Inc (NYSE:GNC)?
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. By comparison, 17 hedge funds held shares or bullish call options in GNC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Parag Vora’s HG Vora Capital Management has the biggest position in GNC Holdings Inc (NYSE:GNC), worth close to $13.7 million, amounting to 1% of its total 13F portfolio. The second most bullish fund manager is Douglas Dethy of DC Capital Partners, with a $4.1 million position; 3% of its 13F portfolio is allocated to the stock. Other peers that are bullish contain Himanshu H. Shah’s Shah Capital Management, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.
Due to the fact that GNC Holdings Inc (NYSE:GNC) has faced bearish sentiment from the smart money, it’s safe to say that there is a sect of hedgies who sold off their full holdings in the third quarter. Intriguingly, Glenn Russell Dubin’s Highbridge Capital Management cut the biggest position of the 700 funds followed by Insider Monkey, valued at close to $7.2 million in stock. Noam Gottesman’s fund, GLG Partners, also dropped its stock, about $0.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at 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 Bankwell Financial Group, Inc. (NASDAQ:BWFG), Gladstone Land Corporation (NASDAQ:LAND), LCNB Corp. (NASDAQ:LCNB), and Natural Gas Services Group, Inc. (NYSE:NGS). This group of stocks’ market values match GNC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BWFG | 5 | 47956 | 0 |
| LAND | 3 | 2192 | 0 |
| LCNB | 2 | 9415 | -1 |
| NGS | 7 | 20491 | 0 |
| Average | 4.25 | 20014 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $27 million in GNC’s case. Natural Gas Services Group, Inc. (NYSE:NGS) is the most popular stock in this table. On the other hand LCNB Corp. (NASDAQ:LCNB) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks GNC Holdings Inc (NYSE:GNC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately GNC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GNC were disappointed as the stock returned -45.8% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
