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Is Garmin Ltd. (GRMN) A Good Stock To Buy?

·5 分鐘文章

In this article we are going to use hedge fund sentiment as a tool and determine whether Garmin Ltd. (NYSE:GRMN) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is GRMN a good stock to buy? The best stock pickers were taking a bullish view. The number of bullish hedge fund positions improved by 5 lately. Garmin Ltd. (NYSE:GRMN) was in 30 hedge funds' portfolios at the end of September. The all time high for this statistic is 32. Our calculations also showed that GRMN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now let's check out the fresh hedge fund action regarding Garmin Ltd. (NYSE:GRMN).

Gavin Saitowitz of Prelude Capital
Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

Do Hedge Funds Think GRMN Is A Good Stock To Buy Now?

At third quarter's end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards GRMN over the last 25 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Garmin Ltd. (NYSE:GRMN). AQR Capital Management has a $158.3 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Select Equity Group, led by Robert Joseph Caruso, holding a $59.3 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism consist of Ken Griffin's Citadel Investment Group, Paul Marshall and Ian Wace's Marshall Wace LLP and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Socorro Asset Management allocated the biggest weight to Garmin Ltd. (NYSE:GRMN), around 3.24% of its 13F portfolio. Potrero Capital Research is also relatively very bullish on the stock, designating 2.02 percent of its 13F equity portfolio to GRMN.

Now, specific money managers have jumped into Garmin Ltd. (NYSE:GRMN) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Garmin Ltd. (NYSE:GRMN). Balyasny Asset Management had $7 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $4.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Mika Toikka's AlphaCrest Capital Management, Steve Cohen's Point72 Asset Management, and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Garmin Ltd. (NYSE:GRMN) but similarly valued. These stocks are TELUS Corporation (NYSE:TU), Paycom Software Inc (NYSE:PAYC), ANSYS, Inc. (NASDAQ:ANSS), Fastenal Company (NASDAQ:FAST), ArcelorMittal (NYSE:MT), Ecopetrol S.A. (NYSE:EC), and Ball Corporation (NYSE:BLL). This group of stocks' market values are closest to GRMN's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TU,12,141291,-1 PAYC,40,1424558,1 ANSS,38,1493156,-8 FAST,30,609114,5 MT,20,1012692,-2 EC,6,64885,0 BLL,27,1457074,-17 Average,24.7,886110,-3.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $886 million. That figure was $465 million in GRMN's case. Paycom Software Inc (NYSE:PAYC) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 6 bullish hedge fund positions. Garmin Ltd. (NYSE:GRMN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GRMN is 73.4. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately GRMN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GRMN were disappointed as the stock returned -14.1% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 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.