Were Hedge Funds Right About Graco Inc. (GGG)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Graco Inc. (NYSE:GGG) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Graco Inc. (NYSE:GGG) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. GGG investors should pay attention to an increase in enthusiasm from smart money of late. There were 24 hedge funds in our database with GGG positions at the end of the second quarter. Our calculations also showed that GGG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a look at the key hedge fund action encompassing Graco Inc. (NYSE:GGG).

Do Hedge Funds Think GGG Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in GGG a year ago. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in Graco Inc. (NYSE:GGG). GAMCO Investors has a $81.2 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $58 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions encompass Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and Jeremy Hosking’s Hosking Partners. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Graco Inc. (NYSE:GGG), around 0.72% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.63 percent of its 13F equity portfolio to GGG.

Now, some big names were leading the bulls’ herd. Tudor Investment Corp, managed by Paul Tudor Jones, assembled the most valuable position in Graco Inc. (NYSE:GGG). Tudor Investment Corp had $6 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $3.9 million position during the quarter. The other funds with new positions in the stock are Peter Algert’s Algert Global, Jinghua Yan’s TwinBeech Capital, and Greg Poole’s Echo Street Capital Management.

Let’s now review hedge fund activity in other stocks similar to Graco Inc. (NYSE:GGG). We will take a look at Allegion plc (NYSE:ALLE), Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), Qiagen NV (NYSE:QGEN), Bruker Corporation (NASDAQ:BRKR), Godaddy Inc (NYSE:GDDY), FMC Corporation (NYSE:FMC), and InterContinental Hotels Group PLC (NYSE:IHG). This group of stocks’ market caps resemble GGG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $759 million. That figure was $258 million in GGG’s case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 6 bullish hedge fund positions. Graco Inc. (NYSE:GGG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GGG is 81.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on GGG as the stock returned 4.3% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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