Do Hedge Funds Love Glaukos Corp (GKOS)?

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Glaukos Corp (NYSE:GKOS).

Glaukos Corp (NYSE:GKOS) investors should be aware of a decrease in hedge fund sentiment in recent months. The hedge funds we track at Insider Monkey echoed a similar sentiment as that of the shares of the company, which dropped 16.53% throughout the last quarter. This demands a further coverage of hedge funds that held positions in Glaukos Corp (NYSE:GKOS) despite this drop.

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 GasLog Ltd (NYSE:GLOG), Par Pacific Holdings, Inc. (NYSEMKT:PARR), and American Railcar Industries, Inc. (NASDAQ:ARII) to gather more data points.

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At the moment, there are dozens of gauges market participants have at their disposal to analyze publicly traded companies. A couple of the most under-the-radar gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the top investment managers can trounce their index-focused peers by a solid margin (see the details here).

Keeping this in mind, we’re going to view the latest action regarding Glaukos Corp (NYSE:GKOS).

Hedge fund activity in Glaukos Corp (NYSE:GKOS)

Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 33% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, OrbiMed Advisors, managed by Samuel Isaly, holds the biggest position in Glaukos Corp (NYSE:GKOS). OrbiMed Advisors has a $70.1 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $4.2 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Richard Driehaus’ Driehaus Capital, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.

Seeing as Glaukos Corp (NYSE:GKOS) has witnessed a declination in interest from the smart money, it’s safe to say that there lies a certain “tier” of hedge funds that elected to cut their full holdings by the end of the third quarter. Interestingly, Paul Tudor Jones’s Tudor Investment Corp sold off the biggest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $1.7 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dumped its stock, about $1 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 3 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Glaukos Corp (NYSE:GKOS) but similarly valued. These stocks are GasLog Ltd (NYSE:GLOG), Par Pacific Holdings, Inc. (NYSEMKT:PARR), American Railcar Industries, Inc. (NASDAQ:ARII), and NutriSystem Inc. (NASDAQ:NTRI). This group of stocks’ market valuations resemble Glaukos Corp (NYSE:GKOS)’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GLOG 16 37990 6
PARR 11 219791 -1
ARII 6 446872 -5
NTRI 27 146856 3

As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $80 million in Glaukos Corp (NYSE:GKOS)’s case. NutriSystem Inc. (NASDAQ:NTRI) is the most popular stock in this table. On the other hand, American Railcar Industries, Inc. (NASDAQ:ARII) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks, Glaukos Corp (NYSE:GKOS) is even less popular than American Railcar Industries, Inc. (NASDAQ:ARII). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.