The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards GoPro Inc (NASDAQ:GPRO).
Is GPRO a good stock to buy now? Prominent investors were in an optimistic mood. The number of bullish hedge fund positions moved up by 4 recently. GoPro Inc (NASDAQ:GPRO) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. Our calculations also showed that GPRO isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to take a glance at the fresh hedge fund action regarding GoPro Inc (NASDAQ:GPRO).
Do Hedge Funds Think GPRO Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GPRO over the last 21 quarters. 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, Lynrock Lake held the most valuable stake in GoPro Inc (NASDAQ:GPRO), which was worth $165.3 million at the end of the third quarter. On the second spot was Prentice Capital Management which amassed $52.8 million worth of shares. Maverick Capital, D E Shaw, and Millennium Management 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 Prentice Capital Management allocated the biggest weight to GoPro Inc (NASDAQ:GPRO), around 20.06% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, dishing out 12.3 percent of its 13F equity portfolio to GPRO.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Maverick Capital, managed by Lee Ainslie, established the most valuable position in GoPro Inc (NASDAQ:GPRO). Maverick Capital had $33.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $7 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Steve Cohen’s Point72 Asset Management, and Renaissance Technologies.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as GoPro Inc (NASDAQ:GPRO) but similarly valued. These stocks are Enterprise Financial Services Corp (NASDAQ:EFSC), Partner Communications Company Ltd (NASDAQ:PTNR), ChipMOS Technologies Inc (NASDAQ:IMOS), CTS Corporation (NYSE:CTS), Tactile Systems Technology, Inc. (NASDAQ:TCMD), Zumiez Inc. (NASDAQ:ZUMZ), and H&E Equipment Services, Inc. (NASDAQ:HEES). All of these stocks’ market caps resemble GPRO’s market cap.
|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 11 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $292 million in GPRO’s case. Zumiez Inc. (NASDAQ:ZUMZ) is the most popular stock in this table. On the other hand Partner Communications Company Ltd (NASDAQ:PTNR) is the least popular one with only 1 bullish hedge fund positions. GoPro Inc (NASDAQ:GPRO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GPRO is 60. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on GPRO as the stock returned 93.2% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.