Is Genomic Health, Inc. (NASDAQ:GHDX) an attractive investment today? Prominent investors are becoming hopeful. The number of long hedge fund positions improved by 1 in recent months.
According to most shareholders, hedge funds are seen as unimportant, outdated financial vehicles of years past. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the bigwigs of this group, about 450 funds. It is estimated that this group has its hands on the majority of the smart money’s total capital, and by tracking their best picks, we have brought to light a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as important, bullish insider trading activity is a second way to parse down the financial markets. Just as you’d expect, there are a variety of motivations for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).
Consequently, let’s take a look at the recent action surrounding Genomic Health, Inc. (NASDAQ:GHDX).
What does the smart money think about Genomic Health, Inc. (NASDAQ:GHDX)?
Heading into 2013, a total of 13 of the hedge funds we track were bullish in this stock, a change of 8% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings substantially.
According to our comprehensive database, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the most valuable position in Genomic Health, Inc. (NASDAQ:GHDX). Baker Bros. Advisors has a $337 million position in the stock, comprising 8.8% of its 13F portfolio. On Baker Bros. Advisors’s heels is Donald Chiboucis of Columbus Circle Investors, with a $11 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include SAC Subsidiary’s CR Intrinsic Investors, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.
Now, specific money managers were breaking ground themselves. CR Intrinsic Investors, managed by SAC Subsidiary, assembled the most outsized position in Genomic Health, Inc. (NASDAQ:GHDX). CR Intrinsic Investors had 10 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Mike Vranos’s Ellington.
What do corporate executives and insiders think about Genomic Health, Inc. (NASDAQ:GHDX)?
Insider trading activity, especially when it’s bullish, is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time period, Genomic Health, Inc. (NASDAQ:GHDX) has experienced 2 unique insiders buying, and 8 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Genomic Health, Inc. (NASDAQ:GHDX). These stocks are ICON plc – Ordinary Shares (NASDAQ:ICLR), Novadaq Technologies Inc. (NASDAQ:NVDQ), Nordion Inc (USA) (NYSE:NDZ), WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX), and Bio-Reference Laboratories Inc (NASDAQ:BRLI). This group of stocks are the members of the medical laboratories & research industry and their market caps match GHDX’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|ICON plc – Ordinary Shares (NASDAQ:ICLR)||16||0||0|
|Novadaq Technologies Inc. (NASDAQ:NVDQ)||9||0||0|
|Nordion Inc (USA) (NYSE:NDZ)||16||0||0|
|WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX)||12||0||0|
|Bio-Reference Laboratories Inc (NASDAQ:BRLI)||10||0||2|
With the returns exhibited by Insider Monkey’s strategies, retail investors should always watch hedge fund and insider trading sentiment, and Genomic Health, Inc. (NASDAQ:GHDX) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.