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Were Hedge Funds Right About Flocking Into Garmin Ltd. (GRMN) ?

Abigail Fisher

Insider Monkey finished processing more than 700 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2018. In this article we are going to take a look at smart money sentiment towards Garmin Ltd. (NASDAQ:GRMN).

Garmin Ltd. (NASDAQ:GRMN) shareholders have witnessed an increase in hedge fund sentiment of late. GRMN was in 31 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 27 hedge funds in our database with GRMN holdings at the end of the previous quarter. Our calculations also showed that GRMN isn't among the 30 most popular stocks among hedge funds.

In the eyes of most traders, hedge funds are viewed as underperforming, old financial vehicles of yesteryear. While there are greater than 8000 funds in operation at present, Our researchers look at the leaders of this club, approximately 750 funds. It is estimated that this group of investors manage the lion's share of all hedge funds' total asset base, and by watching their unrivaled investments, Insider Monkey has unearthed a number of investment strategies that have historically outrun the S&P 500 index. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

GOTHAM ASSET MANAGEMENT

Let's go over the recent hedge fund action regarding Garmin Ltd. (NASDAQ:GRMN).

What have hedge funds been doing with Garmin Ltd. (NASDAQ:GRMN)?

At Q4's end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GRMN over the last 14 quarters. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

GRMN_mar2019

The largest stake in Garmin Ltd. (NASDAQ:GRMN) was held by Citadel Investment Group, which reported holding $49.5 million worth of stock at the end of September. It was followed by AQR Capital Management with a $46.9 million position. Other investors bullish on the company included Select Equity Group, Gotham Asset Management, and D E Shaw.

With a general bullishness amongst the heavyweights, some big names have jumped into Garmin Ltd. (NASDAQ:GRMN) headfirst. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Garmin Ltd. (NASDAQ:GRMN). Point72 Asset Management had $1.3 million invested in the company at the end of the quarter. Minhua Zhang's Weld Capital Management also made a $0.8 million investment in the stock during the quarter. The other funds with brand new GRMN positions are David Costen Haley's HBK Investments, Hoon Kim's Quantinno Capital, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.

Let's go over hedge fund activity in other stocks similar to Garmin Ltd. (NASDAQ:GRMN). These stocks are ANSYS, Inc. (NASDAQ:ANSS), Marathon Oil Corporation (NYSE:MRO), Skyworks Solutions Inc (NASDAQ:SWKS), and Match Group, Inc. (NASDAQ:MTCH). All of these stocks' market caps are closest to GRMN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ANSS,29,733810,3 MRO,37,746125,-2 SWKS,32,666763,7 MTCH,24,295721,-5 Average,30.5,610605,0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $611 million. That figure was $274 million in GRMN's case. Marathon Oil Corporation (NYSE:MRO) is the most popular stock in this table. On the other hand Match Group, Inc. (NASDAQ:MTCH) is the least popular one with only 24 bullish hedge fund positions. Garmin Ltd. (NASDAQ:GRMN) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on GRMN as the stock returned 32.3% and outperformed the market as well. You can see the entire list of these shrewd hedge funds here.

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

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