Is Glu Mobile Inc (GLUU) A Good Stock To Buy?

It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Glu Mobile Inc. (NASDAQ:GLUU) during the quarter below.

Glu Mobile Inc. was in 21 hedge funds’ portfolios at the end of September. GLUU investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 24 hedge funds in our database with GLUU 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 Motorcar Parts of America, Inc. (NASDAQ:MPAA), Gibraltar Industries Inc (NASDAQ:ROCK), and Unit Corporation (NYSE:UNT) to gather more data points.

Today there are many gauges stock market investors have at their disposal to appraise publicly traded companies. Two of the best gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top money managers can outperform the broader indices by a significant amount (see the details here).

Keeping this in mind, let’s check out the latest action regarding Glu Mobile Inc. (NASDAQ:GLUU).

Hedge fund activity in Glu Mobile Inc. (NASDAQ:GLUU)

Heading into Q4, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the second quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, 12 West Capital Management, managed by Joel Ramin, holds the number one position in Glu Mobile Inc. (NASDAQ:GLUU). 12 West Capital Management has a $16.3 million position in the stock, comprising 2.4% of its 13F portfolio. Sitting at the No. 2 spot is D E Shaw, with a $15.6 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism contain Israel Englander’s Millennium Management, Peter S. Park’s Park West Asset Management and Joseph A. Jolson’s Harvest Capital Strategies.

Because Glu Mobile Inc. (NASDAQ:GLUU) has experienced declining sentiment from the smart money, logic holds that there is a sect of fund managers that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Chao Ku’s Nine Chapters Capital Management dropped the largest position of all the hedgies watched by Insider Monkey, worth close to $1.5 million in stock. Millennium Management Subsidiary’s fund, Blue Arrow Capital Management, also said goodbye to its stock, about $1.4 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 3 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Glu Mobile Inc. (NASDAQ:GLUU) but similarly valued. These stocks are Motorcar Parts of America, Inc. (NASDAQ:MPAA), Gibraltar Industries Inc (NASDAQ:ROCK), Unit Corporation (NYSE:UNT), and Mirati Therapeutics, Inc. (NASDAQ:MRTX). All of these stocks’ market caps match GLUU’s market cap.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $106 million in GLUU’s case. Gibraltar Industries Inc (NASDAQ:ROCK) is the most popular stock in this table. On the other hand Unit Corporation (NYSE:UNT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Glu Mobile Inc. (NASDAQ:GLUU) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.