What Do Hedge Funds Think of Genuine Parts Company (GPC)?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Genuine Parts Company (NYSE:GPC)? The smart money sentiment can provide an answer to this question.

Is Genuine Parts Company a buy here? Money managers are taking a pessimistic view. The number of bullish hedge fund positions retreated by 4 in recent months. GPC was in 23 hedge funds’ portfolios at the end of September. There were 27 hedge funds in our database with GPC holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Verisk Analytics, Inc. (NASDAQ:VRSK), Enersis S.A. (ADR) (NYSE:ENI), and Universal Health Services, Inc. (NYSE:UHS) to gather more data points.

Now, let’s check out the key action regarding Genuine Parts Company (NYSE:GPC).

What does the smart money think about Genuine Parts Company (NYSE:GPC)?

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the most valuable position in Genuine Parts Company (NYSE:GPC). GAMCO Investors has a $189.6 million position in the stock, comprising 1.2% of its 13F portfolio. On GAMCO Investors’ heels is Renaissance Technologies, managed by Jim Simons, which holds a $46.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain David Harding’s Winton Capital Management, Joel Greenblatt’s Gotham Asset Management and Phill Gross and Robert Atchinson’s Adage Capital Management.

Judging by the fact that Genuine Parts Company (NYSE:GPC) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds who sold off their entire stakes heading into Q4. At the top of the heap, Israel Englander’s Millennium Management dumped the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $46.9 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund dropped about $5.2 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Genuine Parts Company (NYSE:GPC). We will take a look at Verisk Analytics, Inc. (NASDAQ:VRSK), Enersis S.A. (ADR) (NYSE:ENI), Universal Health Services, Inc. (NYSE:UHS), and CarMax, Inc (NYSE:KMX). This group of stocks’ market values are similar to GPC’s market value.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $691 million. That figure was $392 million in GPC’s case. Universal Health Services, Inc. (NYSE:UHS) is the most popular stock in this table. On the other hand Enersis S.A. (ADR) (NYSE:ENI) is the least popular one with only 13 bullish hedge fund positions. Genuine Parts Company (NYSE:GPC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard UHS might be a better candidate to consider a long position.