The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Genpact Limited (NYSE:G).
Genpact Limited (NYSE:G) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Our calculations also showed that G isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 go over the key hedge fund action encompassing Genpact Limited (NYSE:G).
How are hedge funds trading Genpact Limited (NYSE:G)?
At the end of the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards G over the last 16 quarters. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Genpact Limited (NYSE:G) was held by Arrowstreet Capital, which reported holding $157.9 million worth of stock at the end of March. It was followed by D E Shaw with a $130.7 million position. Other investors bullish on the company included Millennium Management, Junto Capital Management, and Marshall Wace LLP.
Seeing as Genpact Limited (NYSE:G) has experienced declining sentiment from the entirety of the hedge funds we track, it's safe to say that there were a few funds who sold off their entire stakes heading into Q3. At the top of the heap, Greg Poole's Echo Street Capital Management said goodbye to the largest position of the "upper crust" of funds followed by Insider Monkey, totaling close to $13.3 million in stock. Matthew Tewksbury's fund, Stevens Capital Management, also cut its stock, about $2.7 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks similar to Genpact Limited (NYSE:G). We will take a look at L Brands Inc (NYSE:LB), Ceridian HCM Holding Inc. (NYSE:CDAY), Wix.Com Ltd (NASDAQ:WIX), and Unum Group (NYSE:UNM). This group of stocks' market valuations are similar to G's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LB,30,644900,-2 CDAY,22,845775,-8 WIX,26,1073011,-1 UNM,25,493510,0 Average,25.75,764299,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $764 million. That figure was $744 million in G's case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand Ceridian HCM Holding Inc. (NYSE:CDAY) is the least popular one with only 22 bullish hedge fund positions. Genpact Limited (NYSE:G) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on G, though not to the same extent, as the stock returned 1.9% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.