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Did Hedge Funds Make The Right Call On Glu Mobile Inc. (GLUU)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Glu Mobile Inc. (NASDAQ:GLUU) based on that data and determine whether they were really smart about the stock.

Is Glu Mobile Inc. (NASDAQ:GLUU) a healthy stock for your portfolio? Investors who are in the know were taking a bearish view. The number of bullish hedge fund positions went down by 2 lately. Our calculations also showed that GLUU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Harding

David Harding of Winton Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to take a look at the latest hedge fund action regarding Glu Mobile Inc. (NASDAQ:GLUU).

How have hedgies been trading Glu Mobile Inc. (NASDAQ:GLUU)?

Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GLUU over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GLUU A Good Stock To Buy?

The largest stake in Glu Mobile Inc. (NASDAQ:GLUU) was held by Coatue Management, which reported holding $27.5 million worth of stock at the end of September. It was followed by Greenhouse Funds with a $21.2 million position. Other investors bullish on the company included Citadel Investment Group, Arrowstreet Capital, and Portolan Capital Management. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to Glu Mobile Inc. (NASDAQ:GLUU), around 5.16% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, setting aside 1.51 percent of its 13F equity portfolio to GLUU.

Due to the fact that Glu Mobile Inc. (NASDAQ:GLUU) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there were a few money managers that decided to sell off their full holdings by the end of the first quarter. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the largest stake of the 750 funds watched by Insider Monkey, valued at about $15.4 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also cut its stock, about $4.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Glu Mobile Inc. (NASDAQ:GLUU) but similarly valued. These stocks are Cardtronics plc (NASDAQ:CATM), Murphy Oil Corporation (NYSE:MUR), Aimmune Therapeutics Inc (NASDAQ:AIMT), and NuStar Energy L.P. (NYSE:NS). This group of stocks’ market caps match GLUU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CATM 17 246532 -5
MUR 20 46262 -4
AIMT 18 138411 5
NS 4 8087 -3
Average 14.75 109823 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $114 million in GLUU’s case. Murphy Oil Corporation (NYSE:MUR) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 4 bullish hedge fund positions. Glu Mobile Inc. (NASDAQ:GLUU) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on GLUU as the stock returned 47.7% since Q1 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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