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At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Global Payments Inc (NYSE:GPN) makes for a good investment right now.
Is GPN stock a buy or sell? Global Payments Inc (NYSE:GPN) shareholders have witnessed a decrease in hedge fund interest recently. Global Payments Inc (NYSE:GPN) was in 55 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 68. There were 57 hedge funds in our database with GPN positions at the end of the third quarter. Our calculations also showed that GPN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).
John Armitage of Egerton Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind let's check out the recent hedge fund action surrounding Global Payments Inc (NYSE:GPN).
Do Hedge Funds Think GPN Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. On the other hand, there were a total of 64 hedge funds with a bullish position in GPN a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Lone Pine Capital held the most valuable stake in Global Payments Inc (NYSE:GPN), which was worth $1363.8 million at the end of the fourth quarter. On the second spot was Egerton Capital Limited which amassed $794.7 million worth of shares. Coatue Management, Alkeon Capital Management, and Matrix Capital Management 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 Joho Capital allocated the biggest weight to Global Payments Inc (NYSE:GPN), around 12.71% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, earmarking 11.81 percent of its 13F equity portfolio to GPN.
Seeing as Global Payments Inc (NYSE:GPN) has faced declining sentiment from the smart money, it's safe to say that there exists a select few hedge funds who were dropping their full holdings by the end of the fourth quarter. It's worth mentioning that Andrew Immerman and Jeremy Schiffman's Palestra Capital Management dumped the biggest position of all the hedgies followed by Insider Monkey, totaling an estimated $134.4 million in stock. Lee Ainslie's fund, Maverick Capital, also sold off its stock, about $56 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds by the end of the fourth quarter.
Let's go over hedge fund activity in other stocks similar to Global Payments Inc (NYSE:GPN). We will take a look at Equinix, Inc. (REIT) (NASDAQ:EQIX), The PNC Financial Services Group Inc. (NYSE:PNC), Brookfield Asset Management Inc. (NYSE:BAM), Ecolab Inc. (NYSE:ECL), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Dominion Energy Inc. (NYSE:D), and Air Products & Chemicals, Inc. (NYSE:APD). This group of stocks' market caps are similar to GPN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EQIX,42,2001101,0 PNC,35,188415,-2 BAM,38,1330514,3 ECL,45,2449625,-7 VRTX,53,3108859,-2 D,47,1506824,10 APD,50,1282433,1 Average,44.3,1695396,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.3 hedge funds with bullish positions and the average amount invested in these stocks was $1695 million. That figure was $5555 million in GPN's case. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is the most popular stock in this table. On the other hand The PNC Financial Services Group Inc. (NYSE:PNC) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks Global Payments Inc (NYSE:GPN) is more popular among hedge funds. Our overall hedge fund sentiment score for GPN is 77.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately GPN wasn't nearly as popular as these 30 stocks and hedge funds that were betting on GPN were disappointed as the stock returned -4.5% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.