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Is Gildan Activewear Inc (GIL) Going To Burn These Hedge Funds ?

Nina Todic

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2019. What do these smart investors think about Gildan Activewear Inc (NYSE:GIL)?

Gildan Activewear Inc (NYSE:GIL) was in 19 hedge funds' portfolios at the end of the third quarter of 2019. GIL has experienced a decrease in support from the world's most elite money managers lately. There were 24 hedge funds in our database with GIL holdings at the end of the previous quarter. Our calculations also showed that GIL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_256989" align="aligncenter" width="450"] Dmitry Balyasny of Balyasny Asset Managemnet[/caption]

Dmitry Balyasny of Balyasny Asset Managemnet

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to review the recent hedge fund action encompassing Gildan Activewear Inc (NYSE:GIL).

What does smart money think about Gildan Activewear Inc (NYSE:GIL)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GIL over the last 17 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.

Among these funds, Pzena Investment Management held the most valuable stake in Gildan Activewear Inc (NYSE:GIL), which was worth $129.5 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $71.1 million worth of shares. Southpoint Capital Advisors, Balyasny Asset Management, and Marathon Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Marathon Partners allocated the biggest weight to Gildan Activewear Inc (NYSE:GIL), around 5.61% of its 13F portfolio. MD Sass is also relatively very bullish on the stock, designating 3.42 percent of its 13F equity portfolio to GIL.

Due to the fact that Gildan Activewear Inc (NYSE:GIL) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there was a specific group of fund managers that slashed their entire stakes last quarter. It's worth mentioning that Matthew Knauer and Mina Faltas's Nokota Management dropped the biggest investment of the 750 funds followed by Insider Monkey, valued at about $48.2 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund said goodbye to about $14.4 million worth. These moves are interesting, as total hedge fund interest fell by 5 funds last quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Gildan Activewear Inc (NYSE:GIL) but similarly valued. These stocks are IPG Photonics Corporation (NASDAQ:IPGP), Lear Corporation (NYSE:LEA), Cable One Inc (NYSE:CABO), and Jones Lang LaSalle Incorporated (NYSE:JLL). All of these stocks' market caps are similar to GIL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IPGP,14,103750,-2 LEA,33,817858,2 CABO,13,495048,-2 JLL,26,1081252,3 Average,21.5,624477,0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $624 million. That figure was $348 million in GIL's case. Lear Corporation (NYSE:LEA) is the most popular stock in this table. On the other hand Cable One Inc (NYSE:CABO) is the least popular one with only 13 bullish hedge fund positions. Gildan Activewear Inc (NYSE:GIL) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GIL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GIL investors were disappointed as the stock returned -17.6% during the first two months of the fourth 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 among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

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