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Is Global Payments Inc (NYSE:GPN) 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 Global Payments Inc (NYSE:GPN) the right investment to pursue these days? Hedge funds were taking a bearish view. The number of long hedge fund bets were cut by 2 recently. Global Payments Inc (NYSE:GPN) was in 55 hedge funds' portfolios at the end of December. 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 Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Keith Meister of Corvex 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. With all of this in mind we're going to check out the latest hedge fund action regarding Global Payments Inc (NYSE:GPN).
Do Hedge Funds Think GPN Is A Good Stock To Buy Now?
At Q4's end, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the third quarter of 2020. On the other hand, there were a total of 64 hedge funds with a bullish position in GPN a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Lone Pine Capital was the largest shareholder of Global Payments Inc (NYSE:GPN), with a stake worth $1363.8 million reported as of the end of December. Trailing Lone Pine Capital was Egerton Capital Limited, which amassed a stake valued at $794.7 million. Coatue Management, Alkeon Capital Management, and Matrix Capital Management 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 Joho Capital allocated the biggest weight to Global Payments Inc (NYSE:GPN), around 12.71% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, earmarking 11.81 percent of its 13F equity portfolio to GPN.
Due to the fact that Global Payments Inc (NYSE:GPN) has witnessed bearish sentiment from hedge fund managers, it's easy to see that there is a sect of money managers who sold off their positions entirely in the fourth quarter. At the top of the heap, Andrew Immerman and Jeremy Schiffman's Palestra Capital Management cut the biggest position of all the hedgies watched by Insider Monkey, worth close to $134.4 million in stock, and Lee Ainslie's Maverick Capital was right behind this move, as the fund sold off about $56 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds in the fourth quarter.
Let's now take a look at hedge fund activity in other stocks similar to Global Payments Inc (NYSE:GPN). We will take a look at Equinix, Inc. (REIT) (NASDAQ:EQIX), The PNC Financial Services Group Inc. (NYSE:PNC), Brookfield Asset Management Inc. (NYSE:BAM), Ecolab Inc. (NYSE:ECL), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Dominion Energy Inc. (NYSE:D), and Air Products & Chemicals, Inc. (NYSE:APD). This group of stocks' market caps resemble GPN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EQIX,42,2001101,0 PNC,35,188415,-2 BAM,38,1330514,3 ECL,45,2449625,-7 VRTX,53,3108859,-2 D,47,1506824,10 APD,50,1282433,1 Average,44.3,1695396,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.3 hedge funds with bullish positions and the average amount invested in these stocks was $1695 million. That figure was $5555 million in GPN's case. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is the most popular stock in this table. On the other hand The PNC Financial Services Group Inc. (NYSE:PNC) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks Global Payments Inc (NYSE:GPN) is more popular among hedge funds. Our overall hedge fund sentiment score for GPN is 77.3. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Unfortunately GPN wasn't nearly as popular as these 10 stocks and hedge funds that were betting on GPN were disappointed as the stock returned -0.3% since the end of the fourth quarter (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.