In this article we will check out the progression of hedge fund sentiment towards GrowGeneration Corp. (NASDAQ:GRWG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
GrowGeneration Corp. (NASDAQ:GRWG) shareholders have witnessed an increase in enthusiasm from smart money lately. GRWG was in 6 hedge funds’ portfolios at the end of March. There were 4 hedge funds in our database with GRWG holdings at the end of the previous quarter. Our calculations also showed that GRWG 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.
To most stock holders, hedge funds are perceived as underperforming, old financial vehicles of years past. While there are more than 8000 funds trading at the moment, Our experts hone in on the crème de la crème of this club, around 850 funds. Most estimates calculate that this group of people handle bulk of the smart money’s total capital, and by observing their unrivaled stock picks, Insider Monkey has unearthed a number of investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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. Keeping this in mind we’re going to check out the latest hedge fund action regarding GrowGeneration Corp. (NASDAQ:GRWG).
What does smart money think about GrowGeneration Corp. (NASDAQ:GRWG)?
At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in GRWG a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Voss Capital held the most valuable stake in GrowGeneration Corp. (NASDAQ:GRWG), which was worth $1.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $1.2 million worth of shares. Diametric Capital, Springbok Capital, and One68 Global Capital 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 One68 Global Capital allocated the biggest weight to GrowGeneration Corp. (NASDAQ:GRWG), around 3.03% of its 13F portfolio. Voss Capital is also relatively very bullish on the stock, earmarking 2.25 percent of its 13F equity portfolio to GRWG.
As industrywide interest jumped, key money managers have jumped into GrowGeneration Corp. (NASDAQ:GRWG) headfirst. Voss Capital, managed by Travis Cocke, created the most valuable position in GrowGeneration Corp. (NASDAQ:GRWG). Voss Capital had $1.7 million invested in the company at the end of the quarter. David Nguyen and Nancy Oh’s One68 Global Capital also initiated a $0.3 million position during the quarter.
Let’s check out hedge fund activity in other stocks similar to GrowGeneration Corp. (NASDAQ:GRWG). These stocks are First Bank (NASDAQ:FRBA), Jianpu Technology Inc. (NYSE:JT), IVERIC bio, Inc. (NASDAQ:ISEE), and Stellus Capital Investment Corporation (NYSE:SCM). This group of stocks’ market valuations are closest to GRWG’s market valuation.
|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 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $5 million in GRWG’s case. IVERIC bio, Inc. (NASDAQ:ISEE) is the most popular stock in this table. On the other hand Stellus Capital Investment Corporation (NYSE:SCM) is the least popular one with only 2 bullish hedge fund positions. GrowGeneration Corp. (NASDAQ:GRWG) is not the least popular stock in this group but hedge fund interest is still below average. 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 gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on GRWG as the stock returned 99% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.