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Hedge Funds Have Never Been This Bullish On Garrett Motion Inc. (GTX)

Asma UL Husna

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31, so let’s proceed with the discussion of the hedge fund sentiment on Garrett Motion Inc. (NYSE:GTX).

Garrett Motion Inc. (NYSE:GTX) has experienced an increase in hedge fund sentiment recently. GTX was in 19 hedge funds' portfolios at the end of the first quarter of 2019. There were 13 hedge funds in our database with GTX holdings at the end of the previous quarter. Our calculations also showed that GTX isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Brown Hawk Ridge Partners

We're going to take a glance at the recent hedge fund action encompassing Garrett Motion Inc. (NYSE:GTX).

What does the smart money think about Garrett Motion Inc. (NYSE:GTX)?

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 46% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in GTX over the last 15 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.

GTX_june2019

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Deccan Value Advisors, managed by Vinit Bodas, holds the number one position in Garrett Motion Inc. (NYSE:GTX). Deccan Value Advisors has a $101.3 million position in the stock, comprising 7.7% of its 13F portfolio. The second largest stake is held by Sessa Capital, managed by John Petry, which holds a $85.6 million position; 11.9% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism contain Noah Levy and Eugene Dozortsev's Newtyn Management, David Brown's Hawk Ridge Management and Israel Englander's Millennium Management.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Hawk Ridge Management, managed by David Brown, initiated the most outsized position in Garrett Motion Inc. (NYSE:GTX). Hawk Ridge Management had $12.6 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also made a $4.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Glenn Russell Dubin's Highbridge Capital Management, and Cliff Asness's AQR Capital Management.

Let's now take a look at hedge fund activity in other stocks similar to Garrett Motion Inc. (NYSE:GTX). These stocks are NextGen Healthcare, Inc. (NASDAQ:NXGN), Constellium NV (NYSE:CSTM), Neenah, Inc. (NYSE:NP), and Patrick Industries, Inc. (NASDAQ:PATK). This group of stocks' market caps are similar to GTX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NXGN,13,31282,-2 CSTM,41,264118,9 NP,7,12403,3 PATK,17,91534,-7 Average,19.5,99834,0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $262 million in GTX's case. Constellium NV (NYSE:CSTM) is the most popular stock in this table. On the other hand Neenah, Inc. (NYSE:NP) is the least popular one with only 7 bullish hedge fund positions. Garrett Motion Inc. (NYSE:GTX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on GTX as the stock returned 8.4% during the same time frame and outperformed the market by an even larger margin.

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

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