In this article we will check out the progression of hedge fund sentiment towards Gentex Corporation (NASDAQ:GNTX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Gentex Corporation (NASDAQ:GNTX) a bargain? Hedge funds are in a bullish mood. The number of bullish hedge fund positions improved by 5 lately. Our calculations also showed that GNTX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). GNTX was in 37 hedge funds' portfolios at the end of the first quarter of 2020. There were 32 hedge funds in our database with GNTX positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26388" align="aligncenter" width="390"] Lee Ainslie of Maverick Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's analyze the new hedge fund action regarding Gentex Corporation (NASDAQ:GNTX).
What does smart money think about Gentex Corporation (NASDAQ:GNTX)?
At the end of the first quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in GNTX a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Adage Capital Management held the most valuable stake in Gentex Corporation (NASDAQ:GNTX), which was worth $94.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $93.2 million worth of shares. Nitorum Capital, Citadel Investment Group, and Royce & Associates 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 5.06% of its 13F portfolio. Motley Fool Asset Management is also relatively very bullish on the stock, dishing out 0.86 percent of its 13F equity portfolio to GNTX.
As industrywide interest jumped, some big names were breaking ground themselves. Cinctive Capital Management, managed by Richard SchimeláandáLawrence Sapanski, initiated the most outsized position in Gentex Corporation (NASDAQ:GNTX). Cinctive Capital Management had $2.3 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also initiated a $1.4 million position during the quarter. The following funds were also among the new GNTX investors: Lee Ainslie's Maverick Capital, Peter Muller's PDT Partners, and Bruce Kovner's Caxton Associates LP.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Gentex Corporation (NASDAQ:GNTX) but similarly valued. These stocks are UGI Corp (NYSE:UGI), Genpact Limited (NYSE:G), National Retail Properties, Inc. (NYSE:NNN), and Bruker Corporation (NASDAQ:BRKR). 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 UGI,27,253339,4 G,34,335413,-3 NNN,19,62007,-4 BRKR,21,109920,-4 Average,25.25,190170,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $479 million in GNTX's case. Genpact Limited (NYSE:G) is the most popular stock in this table. On the other hand National Retail Properties, Inc. (NYSE:NNN) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Gentex Corporation (NASDAQ:GNTX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on GNTX, though not to the same extent, as the stock returned 19.9% in Q2 (through the end of May) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.