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Is Gardner Denver Holdings, Inc. (GDI) A Good Stock To Buy?

Nina Todic

Before we spend countless hours researching a company, we'd 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 Gardner Denver Holdings, Inc. (NYSE:GDI).

Gardner Denver Holdings, Inc. (NYSE:GDI) shareholders have witnessed a decrease in hedge fund interest in recent months. GDI was in 23 hedge funds' portfolios at the end of the first quarter of 2019. There were 27 hedge funds in our database with GDI holdings at the end of the previous quarter. Our calculations also showed that gdi isn't among the 30 most popular stocks among hedge funds.

According to most traders, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, We choose to focus on the elite of this club, about 750 funds. These hedge fund managers direct the lion's share of the hedge fund industry's total capital, and by monitoring their top stock picks, Insider Monkey has brought to light various investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.

John Overdeck of Two Sigma

We're going to take a peek at the new hedge fund action surrounding Gardner Denver Holdings, Inc. (NYSE:GDI).

What does the smart money think about Gardner Denver Holdings, Inc. (NYSE:GDI)?

At Q1's end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in GDI over the last 15 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.

No of Hedge Funds with GDI Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in Gardner Denver Holdings, Inc. (NYSE:GDI). Adage Capital Management has a $94.8 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Edward Goodnow of Goodnow Investment Group, with a $42.7 million position; the fund has 5.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Anand Parekh's Alyeska Investment Group, John Overdeck and David Siegel's Two Sigma Advisors and Cliff Asness's AQR Capital Management.

Due to the fact that Gardner Denver Holdings, Inc. (NYSE:GDI) has witnessed falling interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of funds that elected to cut their full holdings by the end of the third quarter. Intriguingly, Brandon Haley's Holocene Advisors said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, valued at close to $17.1 million in stock. Jeffrey Talpins's fund, Element Capital Management, also sold off its stock, about $16.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the third quarter.

Let's go over hedge fund activity in other stocks similar to Gardner Denver Holdings, Inc. (NYSE:GDI). These stocks are Coupa Software Incorporated (NASDAQ:COUP), Pilgrim's Pride Corporation (NASDAQ:PPC), First Solar, Inc. (NASDAQ:FSLR), and Leggett & Platt, Inc. (NYSE:LEG). This group of stocks' market valuations are similar to GDI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COUP,41,1385130,5 PPC,14,140859,-3 FSLR,23,358479,1 LEG,10,27949,1 Average,22,478104,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $478 million. That figure was $386 million in GDI's case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand Leggett & Platt, Inc. (NYSE:LEG) is the least popular one with only 10 bullish hedge fund positions. Gardner Denver Holdings, Inc. (NYSE:GDI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on GDI as the stock returned 24.8% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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