Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Gartner Inc (NYSE:IT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Gartner Inc (NYSE:IT) investors should be aware of an increase in hedge fund interest recently. IT was in 17 hedge funds' portfolios at the end of the second quarter of 2019. There were 15 hedge funds in our database with IT positions at the end of the previous quarter. Our calculations also showed that IT isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the new hedge fund action surrounding Gartner Inc (NYSE:IT).
How are hedge funds trading Gartner Inc (NYSE:IT)?
Heading into the third quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in IT over the last 16 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Gartner Inc (NYSE:IT), with a stake worth $380 million reported as of the end of March. Trailing Select Equity Group was Bares Capital Management, which amassed a stake valued at $379.7 million. Melvin Capital Management, Citadel Investment Group, and Adage Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the largest position in Gartner Inc (NYSE:IT). Balyasny Asset Management had $13.7 million invested in the company at the end of the quarter. Robert B. Gillam's McKinley Capital Management also made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, D. E. Shaw's D E Shaw, and Benjamin A. Smith's Laurion Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Gartner Inc (NYSE:IT) but similarly valued. We will take a look at NetApp Inc. (NASDAQ:NTAP), Darden Restaurants, Inc. (NYSE:DRI), Dover Corporation (NYSE:DOV), and Evergy, Inc. (NYSE:EVRG). All of these stocks' market caps match IT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NTAP,26,907458,2 DRI,24,798896,-14 DOV,32,604250,2 EVRG,25,962365,1 Average,26.75,818242,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $818 million. That figure was $1005 million in IT's case. Dover Corporation (NYSE:DOV) is the most popular stock in this table. On the other hand Darden Restaurants, Inc. (NYSE:DRI) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Gartner Inc (NYSE:IT) is even less popular than DRI. Hedge funds dodged a bullet by taking a bearish stance towards IT. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately IT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IT investors were disappointed as the stock returned -11.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks (see the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.