With market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, low commodity prices and economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while, still, hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Genomic Health, Inc. (NASDAQ:GHDX).
Genomic Health, Inc. investors should pay attention to a decrease in hedge fund sentiment lately. GHDX was in 13 hedge funds’ portfolio at the end of the third quarter of 2015. There were 15 hedge funds in our database with GHDX holdings at the end of the previous quarter. At the end of this article we will also compare GHDX to other stocks including Oritani Financial Corp. (NASDAQ:ORIT), Wingstop Inc (NASDAQ:WING), and Manchester United PLC (NYSE:MANU) to get a better sense of its popularity.
To the average investor there are many signals shareholders use to grade stocks. A duo of the most under-the-radar signals are hedge fund and insider trading signals. Hedge fund experts at Insider Monkey have shown that, historically, those who follow the top picks of the top investment managers can beat the market by a solid amount (see the details here).
Now, we’re going to review the new hedge fund action encompassing Genomic Health, Inc. (NASDAQ:GHDX).
How have hedgies been trading Genomic Health, Inc. (NASDAQ:GHDX)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.
Healthcare hedge fund 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 $289 million position in the stock, comprising 2.7% of its 13F portfolio. The second most bullish hedge fund manager is Camber Capital Management, led by Stephen DuBois, holding a $51.8 million position; 4.4% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include James E. Flynn’s Deerfield Management, Israel Englander’s Millennium Management and Millennium Management Subsidiary’s Decade Capital Management.
Because Genomic Health, Inc. (NASDAQ:GHDX) has faced declining sentiment from the smart money, it’s easy to see that there is a sect of money managers who sold off their entire stakes heading into Q4. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $1 million in stock. Vishal Saluja and Pham Quang’s fund, Endurant Capital Management, also sold off its stock, about $0.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Genomic Health, Inc. (NASDAQ:GHDX). We will take a look at Oritani Financial Corp. (NASDAQ:ORIT), Wingstop Inc (NASDAQ:WING), Manchester United PLC (NYSE:MANU), and JinkoSolar Holding Co., Ltd. (NYSE:JKS). All of these stocks’ market caps resemble GHDX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. Oritani Financial Corp. (NASDAQ:ORIT) is the most popular stock in this table. On the other hand JinkoSolar Holding Co., Ltd. (NYSE:JKS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Genomic Health, Inc. (NASDAQ:GHDX) is more popular among hedge funds. More importantly, hedge funds actually increased the total amount they invested in this company. Camber Capital increased its stake by 17% to $52 million. So it may even be safe to say that Arrowstreet and Endurant Capital were selling to Camber. Overall, hedge funds owned more than 58% of this stock’s outstanding shares. Considering that hedge funds are fond of this stock, it may be a good idea to analyze it in detail and potentially include it in your portfolio.