Should You Buy Garmin Ltd. (GRMN)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Garmin Ltd. (NASDAQ:GRMN).

Is Garmin Ltd. (NASDAQ:GRMN) undervalued? Investors who are in the know are getting more optimistic. The number of bullish hedge fund bets increased by 1 in recent months. Our calculations also showed that GRMN 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.

If you’d ask most shareholders, hedge funds are seen as slow, outdated investment tools of years past. While there are greater than 8000 funds in operation today, Our researchers choose to focus on the top tier of this group, approximately 850 funds. These investment experts handle the majority of the smart money’s total asset base, and by following their finest equity investments, Insider Monkey has determined numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per 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 .


Cliff Asness of AQR Capital Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 take a look at the recent hedge fund action encompassing Garmin Ltd. (NASDAQ:GRMN).

How are hedge funds trading Garmin Ltd. (NASDAQ:GRMN)?

At Q1’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GRMN over the last 18 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.

According to Insider Monkey’s hedge fund database, Select Equity Group, managed by Robert Joseph Caruso, holds the biggest position in Garmin Ltd. (NASDAQ:GRMN). Select Equity Group has a $150.1 million position in the stock, comprising 1% of its 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which holds a $72.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish include Renaissance Technologies, D. E. Shaw’s D E Shaw and Jeremy Hosking’s Hosking Partners. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to Garmin Ltd. (NASDAQ:GRMN), around 3.94% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, designating 1.04 percent of its 13F equity portfolio to GRMN.

Consequently, specific money managers have jumped into Garmin Ltd. (NASDAQ:GRMN) headfirst. Greenvale Capital, managed by Bruce Emery, established the most outsized position in Garmin Ltd. (NASDAQ:GRMN). Greenvale Capital had $15 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $2.8 million position during the quarter. The following funds were also among the new GRMN investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Mike Vranos’s Ellington, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s check out hedge fund activity in other stocks similar to Garmin Ltd. (NASDAQ:GRMN). These stocks are Conagra Brands, Inc. (NYSE:CAG), First Republic Bank (NYSE:FRC), Altice USA, Inc. (NYSE:ATUS), and Cardinal Health, Inc. (NYSE:CAH). This group of stocks’ market caps are similar to GRMN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAG 30 538429 1
FRC 28 916056 1
ATUS 47 2396363 -7
CAH 44 792889 10
Average 37.25 1160934 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.25 hedge funds with bullish positions and the average amount invested in these stocks was $1161 million. That figure was $394 million in GRMN’s case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand First Republic Bank (NYSE:FRC) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Garmin Ltd. (NASDAQ:GRMN) is even less popular than FRC. 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 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on GRMN, though not to the same extent, as the stock returned 20.3% during the second quarter (through the end of May) and outperformed the market as well.

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