Hedge Funds Are Coming Back To Garmin Ltd. (GRMN)

·5 min read

In this article you are going to find out whether hedge funds think Garmin Ltd. (NASDAQ:GRMN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Garmin Ltd. (NASDAQ:GRMN) shareholders have witnessed an increase in hedge fund sentiment recently. Garmin Ltd. (NASDAQ:GRMN) was in 25 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 32. There were 23 hedge funds in our database with GRMN positions at the end of the first quarter. Our calculations also showed that GRMN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Today there are a multitude of metrics stock market investors can use to assess publicly traded companies. A pair of the most underrated metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top money managers can beat the broader indices by a significant amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover 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 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. 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 let's go over the key hedge fund action surrounding Garmin Ltd. (NASDAQ:GRMN).

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

At second quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the first quarter of 2020. On the other hand, there were a total of 23 hedge funds with a bullish position in GRMN a year ago. With hedge funds' capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, AQR Capital Management held the most valuable stake in Garmin Ltd. (NASDAQ:GRMN), which was worth $183.6 million at the end of the second quarter. On the second spot was Select Equity Group which amassed $64.1 million worth of shares. D E Shaw, Citadel Investment Group, and Hosking Partners 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 Socorro Asset Management allocated the biggest weight to Garmin Ltd. (NASDAQ:GRMN), around 3.04% of its 13F portfolio. Potrero Capital Research is also relatively very bullish on the stock, earmarking 1.94 percent of its 13F equity portfolio to GRMN.

As one would reasonably expect, specific money managers were breaking ground themselves. Bridgewater Associates, managed by Ray Dalio, created the largest position in Garmin Ltd. (NASDAQ:GRMN). Bridgewater Associates had $8.1 million invested in the company at the end of the quarter. Qing Li's Sciencast Management also initiated a $1.8 million position during the quarter. The following funds were also among the new GRMN investors: John Overdeck and David Siegel's Two Sigma Advisors, Tony Chin's Infini Capital, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.

Let's go over hedge fund activity in other stocks similar to Garmin Ltd. (NASDAQ:GRMN). We will take a look at Franco-Nevada Corporation (NYSE:FNV), Delta Air Lines, Inc. (NYSE:DAL), Arista Networks Inc (NYSE:ANET), Eversource Energy (NYSE:ES), Interactive Brokers Group, Inc. (NASDAQ:IBKR), HubSpot Inc (NYSE:HUBS), and Coca-Cola Europacific Partners PLC (NASDAQ:CCEP). This group of stocks' market caps match GRMN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FNV,23,959211,3 DAL,49,1218077,-1 ANET,35,318271,9 ES,26,391290,2 IBKR,36,1481835,5 HUBS,54,2674601,8 CCEP,31,1300875,6 Average,36.3,1192023,4.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1192 million. That figure was $477 million in GRMN's case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand Franco-Nevada Corporation (NYSE:FNV) is the least popular one with only 23 bullish hedge fund positions. Garmin Ltd. (NASDAQ:GRMN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GRMN is 33.7. 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 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on GRMN as the stock returned 14.6% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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

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