GlaxoSmithKline plc (ADR) (NYSE:GSK) investors should pay attention to a decrease in hedge fund interest lately.
If you'd ask most stock holders, hedge funds are assumed to be underperforming, outdated financial vehicles of yesteryear. While there are over 8000 funds trading today, we at Insider Monkey hone in on the moguls of this group, about 450 funds. It is widely believed that this group oversees most of all hedge funds' total asset base, and by watching their best picks, we have come up with a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as integral, positive insider trading sentiment is a second way to break down the investments you're interested in. Just as you'd expect, there are a variety of reasons for an executive to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this tactic if piggybackers understand where to look (learn more here).
Consequently, it's important to take a look at the latest action surrounding GlaxoSmithKline plc (ADR) (NYSE:GSK).
In preparation for this quarter, a total of 18 of the hedge funds we track held long positions in this stock, a change of 0% from the first quarter. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably.
According to our comprehensive database, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in GlaxoSmithKline plc (ADR) (NYSE:GSK). Fisher Asset Management has a $519.1 million position in the stock, comprising 1.4% of its 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $330.5 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Bill Miller's Legg Mason Capital Management, Jim Simons's Renaissance Technologies and Warren Buffett's Berkshire Hathaway.
Since GlaxoSmithKline plc (ADR) (NYSE:GSK) has witnessed falling interest from the smart money, logic holds that there were a few hedgies that slashed their positions entirely last quarter. It's worth mentioning that Malcolm Fairbairn's Ascend Capital said goodbye to the largest investment of the 450+ funds we key on, totaling an estimated $30.9 million in stock.. Sanford J. Colen's fund, Apex Capital, also cut its stock, about $11.7 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider purchases made by high-level executives is particularly usable when the company in focus has seen transactions within the past 180 days. Over the last half-year time frame, GlaxoSmithKline plc (ADR) (NYSE:GSK) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let's check out hedge fund and insider activity in other stocks similar to GlaxoSmithKline plc (ADR) (NYSE:GSK). These stocks are AbbVie Inc (NYSE:ABBV), Bristol Myers Squibb Co. (NYSE:BMY), Novartis AG (ADR) (NYSE:NVS), Sanofi SA (ADR) (NYSE:SNY), and Merck & Co., Inc. (NYSE:MRK). This group of stocks belong to the drug manufacturers - major industry and their market caps are similar to GSK's market cap.