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Is GPS Stock A Buy or Sell?

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Abigail Fisher
·5 min read
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Is The Gap Inc. (NYSE:GPS) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is GPS stock a buy or sell? The Gap Inc. (NYSE:GPS) has experienced an increase in activity from the world's largest hedge funds in recent months. The Gap Inc. (NYSE:GPS) was in 38 hedge funds' portfolios at the end of December. The all time high for this statistic is 38. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 35 hedge funds in our database with GPS holdings at the end of September. Our calculations also showed that GPS isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

COATUE MANAGEMENT
COATUE MANAGEMENT

Philippe Laffont of Coatue Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. With all of this in mind we're going to view the latest hedge fund action encompassing The Gap Inc. (NYSE:GPS).

Do Hedge Funds Think GPS Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GPS over the last 22 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.

The largest stake in The Gap Inc. (NYSE:GPS) was held by Coatue Management, which reported holding $149.3 million worth of stock at the end of December. It was followed by Two Sigma Advisors with a $120.2 million position. Other investors bullish on the company included Holocene Advisors, Arrowstreet Capital, and Scopus Asset Management. In terms of the portfolio weights assigned to each position Scopus Asset Management allocated the biggest weight to The Gap Inc. (NYSE:GPS), around 0.7% of its 13F portfolio. Chescapmanager LLC is also relatively very bullish on the stock, setting aside 0.64 percent of its 13F equity portfolio to GPS.

As aggregate interest increased, specific money managers have jumped into The Gap Inc. (NYSE:GPS) headfirst. Holocene Advisors, managed by Brandon Haley, assembled the most outsized position in The Gap Inc. (NYSE:GPS). Holocene Advisors had $60.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $23.8 million investment in the stock during the quarter. The following funds were also among the new GPS investors: Zach Schreiber's Point State Capital, Paul Marshall and Ian Wace's Marshall Wace LLP, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.

Let's check out hedge fund activity in other stocks similar to The Gap Inc. (NYSE:GPS). These stocks are Gerdau SA (NYSE:GGB), Hyatt Hotels Corporation (NYSE:H), AECOM (NYSE:ACM), Berry Global Group Inc (NYSE:BERY), Nielsen Holdings plc (NYSE:NLSN), Kodiak Sciences Inc (NASDAQ:KOD), and Voya Financial Inc (NYSE:VOYA). This group of stocks' market values are closest to GPS's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GGB,15,196789,4 H,27,757056,1 ACM,37,774116,-2 BERY,34,1289609,-9 NLSN,34,1627449,4 KOD,20,2452174,0 VOYA,44,1189699,-5 Average,30.1,1183842,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $1184 million. That figure was $755 million in GPS's case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 15 bullish hedge fund positions. The Gap Inc. (NYSE:GPS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GPS is 77.7. 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. Hedge funds were also right about betting on GPS as the stock returned 53.5% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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