The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of Global Payments Inc (NYSE:GPN).
Is Global Payments Inc (NYSE:GPN) a superb stock to buy now? Money managers were in an optimistic mood. The number of bullish hedge fund positions moved up by 7 in recent months. Global Payments Inc (NYSE:GPN) was in 62 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 68. Our calculations also showed that GPN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 55 hedge funds in our database with GPN positions at the end of the fourth quarter.
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 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Armitage of Egerton Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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. Keeping this in mind we're going to take a look at the recent hedge fund action surrounding Global Payments Inc (NYSE:GPN).
Do Hedge Funds Think GPN Is A Good Stock To Buy Now?
At the end of March, a total of 62 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the fourth quarter of 2020. By comparison, 67 hedge funds held shares or bullish call options in GPN a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Global Payments Inc (NYSE:GPN) was held by Lone Pine Capital, which reported holding $855.8 million worth of stock at the end of December. It was followed by Egerton Capital Limited with a $613.9 million position. Other investors bullish on the company included Matrix Capital Management, Alkeon Capital Management, and Coatue Management. In terms of the portfolio weights assigned to each position Joho Capital allocated the biggest weight to Global Payments Inc (NYSE:GPN), around 18.64% of its 13F portfolio. Jeneq Management is also relatively very bullish on the stock, setting aside 16.36 percent of its 13F equity portfolio to GPN.
As industrywide interest jumped, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the biggest position in Global Payments Inc (NYSE:GPN). Marshall Wace LLP had $143.4 million invested in the company at the end of the quarter. Daniel S. Och's OZ Management also initiated a $104.6 million position during the quarter. The other funds with brand new GPN positions are Brandon Haley's Holocene Advisors, Brennan Diaz's Fernbridge Capital Management, and Peter Seuss's Prana Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Global Payments Inc (NYSE:GPN) but similarly valued. We will take a look at Banco Santander, S.A. (NYSE:SAN), Capital One Financial Corp. (NYSE:COF), Twilio Inc. (NYSE:TWLO), Takeda Pharmaceutical Company Limited (NYSE:TAK), Bank of Montreal (NYSE:BMO), Analog Devices, Inc. (NASDAQ:ADI), and Illumina, Inc. (NASDAQ:ILMN). All of these 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 SAN,15,490548,1 COF,59,3139814,3 TWLO,99,5812460,5 TAK,19,860444,1 BMO,15,204401,4 ADI,50,4860676,-8 ILMN,52,1595824,7 Average,44.1,2423452,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.1 hedge funds with bullish positions and the average amount invested in these stocks was $2423 million. That figure was $4558 million in GPN's case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Banco Santander, S.A. (NYSE:SAN) is the least popular one with only 15 bullish hedge fund positions. Global Payments Inc (NYSE:GPN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GPN is 65.3. 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. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately GPN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GPN were disappointed as the stock returned -3.9% since the end of March (through 6/11) 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.