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Corning Incorporated (GLW): Are Hedge Funds Right About This Stock?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Corning Incorporated (NYSE:GLW).

Is Corning Incorporated (NYSE:GLW) a splendid investment now? Hedge funds are turning bullish. The number of bullish hedge fund positions went up by 1 in recent months. Our calculations also showed that GLW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). GLW was in 27 hedge funds’ portfolios at the end of September. There were 26 hedge funds in our database with GLW holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are plenty of tools stock traders have at their disposal to grade stocks. A duo of the less known tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can beat the broader indices by a solid margin (see the details here).

Donald Yacktman of Yacktman Asset Management

Donald Yacktman of Yacktman Asset Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s review the latest hedge fund action regarding Corning Incorporated (NYSE:GLW).

How are hedge funds trading Corning Incorporated (NYSE:GLW)?

Heading into the fourth quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the second quarter of 2019. On the other hand, there were a total of 27 hedge funds with a bullish position in GLW a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

GLW_dec2019

The largest stake in Corning Incorporated (NYSE:GLW) was held by Winton Capital Management, which reported holding $36.7 million worth of stock at the end of September. It was followed by Yacktman Asset Management with a $34.8 million position. Other investors bullish on the company included Masters Capital Management, Adage Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Valueworks LLC allocated the biggest weight to Corning Incorporated (NYSE:GLW), around 3.53% of its portfolio. Boardman Bay Capital Management is also relatively very bullish on the stock, dishing out 2.31 percent of its 13F equity portfolio to GLW.

As one would reasonably expect, key hedge funds were breaking ground themselves. Masters Capital Management, managed by Mike Masters, initiated the most valuable call position in Corning Incorporated (NYSE:GLW). Masters Capital Management had $28.5 million invested in the company at the end of the quarter. David E. Shaw’s D E Shaw also initiated a $5.5 million position during the quarter. The other funds with brand new GLW positions are Matthew Hulsizer’s PEAK6 Capital Management, Joshua Nash’s Ulysses Management, and Daniel Beltzman and Gergory Smith’s Birch Run Capital.

Let’s now review hedge fund activity in other stocks similar to Corning Incorporated (NYSE:GLW). We will take a look at Telefonica Brasil SA (NYSE:VIV), Interactive Brokers Group, Inc. (NASDAQ:IBKR), Microchip Technology Incorporated (NASDAQ:MCHP), and State Street Corporation (NYSE:STT). This group of stocks’ market caps are similar to GLW’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VIV 13 92351 1
IBKR 24 1030551 0
MCHP 29 1167981 3
STT 33 1207053 -3
Average 24.75 874484 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $874 million. That figure was $203 million in GLW’s case. State Street Corporation (NYSE:STT) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 13 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GLW wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GLW were disappointed as the stock returned 2.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.

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