Is Corning Incorporated (GLW) Going to Burn These Hedge Funds?

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 5.2% during the last 12 months ending October 30, 2015. Less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 S&P 500 stocks among hedge funds at the end of September 2014 had an average return of 9.5% during the same period. Sixty three percent of these 30 stocks outperformed the market. Hedge funds had bad stock picks like everyone else. Micron, which lost 50% over this period, was one of hedge funds’ 30 favorite S&P 500 stocks. Anadarko Petroleum was another failed stock pick which lost more than 26%. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about Corning Incorporated (NYSE:GLW).

Is Corning Incorporated (NYSE:GLW) a good investment right now? The smart money is becoming less hopeful. The number of bullish hedge fund positions were trimmed by 1 lately. GLW was in 38 hedge funds’ portfolios at the end of September. There were 39 hedge funds in our database with GLW holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Energy Transfer Partners LP (NYSE:ETP), Nomura Holdings, Inc. (ADR) (NYSE:NMR), and Sherwin-Williams Company (NYSE:SHW) to gather more data points.

In the eyes of most stock holders, hedge funds are assumed to be underperforming, old investment tools of years past. While there are over 8000 funds trading at the moment, Our experts look at the leaders of this group, approximately 700 funds. These investment experts manage the lion’s share of all hedge funds’ total asset base, and by tracking their highest performing equity investments, Insider Monkey has unsheathed many investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, we’re going to view the new action surrounding Corning Incorporated (NYSE:GLW).

How have hedgies been trading Corning Incorporated (NYSE:GLW)?

At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, inching down by 3% from the second quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John A. Levin’s Levin Capital Strategies has the biggest position in Corning Incorporated (NYSE:GLW), worth close to $195.4 million, corresponding to 3.3% of its total 13F portfolio. On Levin Capital Strategies’s heels is Kerr Neilson of Platinum Asset Management, with a $164.6 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise David Harding’s Winton Capital Management, Richard S. Pzena’s Pzena Investment Management and Donald Yacktman’s Yacktman Asset Management.

Because Corning Incorporated (NYSE:GLW) has faced bearish sentiment from the smart money, we can see that there lies a certain “tier” of hedgies who were dropping their entire stakes last quarter. Interestingly, Jim Simons’s Renaissance Technologies cut the largest investment of the 700 funds watched by Insider Monkey, worth about $22.3 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its holding, about $14.4 million worth of GLW shares. These transactions are important to note, as aggregate hedge fund interest was cut by 1 fund last quarter.

Let’s go over hedge fund activity in other stocks similar to Corning Incorporated (NYSE:GLW). These stocks are Energy Transfer Partners LP (NYSE:ETP), Nomura Holdings, Inc. (ADR) (NYSE:NMR), Sherwin-Williams Company (NYSE:SHW), and Cerner Corporation (NASDAQ:CERN). All of these stocks’ market caps match GLW’s market cap.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $612 million. That figure was $958 million in GLW’s case. Sherwin-Williams Company (NYSE:SHW) is the most popular stock in this table, while Nomura Holdings, Inc. (ADR) (NYSE:NMR) is the laggard with only 8 bullish hedge fund positions. Corning Incorporated (NYSE:GLW) is not the most popular stock in this group, but hedge fund interest is still above average. While this is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SHW might be a better candidate to consider a long position.