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Hedge Funds Are Getting Out Of Gentex Corporation (GNTX)

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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Gentex Corporation (NASDAQ:GNTX).

Gentex Corporation (NASDAQ:GNTX) has seen a decrease in activity from the world's largest hedge funds of late. Gentex Corporation (NASDAQ:GNTX) was in 27 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 40. There were 34 hedge funds in our database with GNTX positions at the end of the second quarter. Our calculations also showed that GNTX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla 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. Now we're going to view the latest hedge fund action regarding Gentex Corporation (NASDAQ:GNTX).

Peter Algert of Algert Global

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

At third quarter's end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the second quarter of 2021. By comparison, 40 hedge funds held shares or bullish call options in GNTX a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

More specifically, Ariel Investments was the largest shareholder of Gentex Corporation (NASDAQ:GNTX), with a stake worth $107.4 million reported as of the end of September. Trailing Ariel Investments was D E Shaw, which amassed a stake valued at $91.2 million. AQR Capital Management, Royce & Associates, and Nitorum Capital 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 Nitorum Capital allocated the biggest weight to Gentex Corporation (NASDAQ:GNTX), around 2.65% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, dishing out 1.22 percent of its 13F equity portfolio to GNTX.

Due to the fact that Gentex Corporation (NASDAQ:GNTX) has witnessed declining sentiment from the entirety of the hedge funds we track, it's easy to see that there were a few fund managers who sold off their entire stakes in the third quarter. It's worth mentioning that Paul Tudor Jones's Tudor Investment Corp dropped the biggest position of the 750 funds watched by Insider Monkey, comprising about $4.9 million in stock. Charles Montanaro's fund, Montanaro Asset Management, also dumped its stock, about $4.1 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 7 funds in the third quarter.

Let's now review hedge fund activity in other stocks similar to Gentex Corporation (NASDAQ:GNTX). We will take a look at AptarGroup, Inc. (NYSE:ATR), Cosan S.A. (NYSE:CSAN), Rexnord Corp (NYSE:RXN), TuSimple Holdings Inc. (NASDAQ:TSP), Avis Budget Group Inc. (NASDAQ:CAR), Huntington Ingalls Industries Inc (NYSE:HII), and Olin Corporation (NYSE:OLN). This group of stocks' market valuations are similar to GNTX's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATR,27,344498,0 CSAN,5,110211,0 RXN,30,840383,1 TSP,12,884094,-2 CAR,26,2463715,-1 HII,15,163344,-6 OLN,43,1169558,6 Average,22.6,853686,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $854 million. That figure was $511 million in GNTX's case. Olin Corporation (NYSE:OLN) is the most popular stock in this table. On the other hand Cosan S.A. (NYSE:CSAN) is the least popular one with only 5 bullish hedge fund positions. Gentex Corporation (NASDAQ:GNTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GNTX is 47.2. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately GNTX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GNTX were disappointed as the stock returned 6.7% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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