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Glaukos Corporation (GKOS): Hedge Fund Interest Inching Up

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Glaukos Corporation (NYSE:GKOS) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Is Glaukos Corporation (NYSE:GKOS) the right investment to pursue these days? Prominent investors were becoming more confident. The number of long hedge fund bets inched up by 3 recently. Glaukos Corporation (NYSE:GKOS) was in 18 hedge funds’ portfolios at the end of June. The all time high for this statistics is 21. Our calculations also showed that GKOS isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Samuel Isaly Orbimed Advisors

Samuel Isaly of OrbiMed Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let’s take a peek at the latest hedge fund action regarding Glaukos Corporation (NYSE:GKOS).

Hedge fund activity in Glaukos Corporation (NYSE:GKOS)

At second quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GKOS over the last 20 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Among these funds, OrbiMed Advisors held the most valuable stake in Glaukos Corporation (NYSE:GKOS), which was worth $46.5 million at the end of the third quarter. On the second spot was Deerfield Management which amassed $33.6 million worth of shares. Camber Capital Management, Citadel Investment Group, and Great Point Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Camber Capital Management allocated the biggest weight to Glaukos Corporation (NYSE:GKOS), around 1.6% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, designating 1.54 percent of its 13F equity portfolio to GKOS.

As aggregate interest increased, specific money managers were breaking ground themselves. Camber Capital Management, managed by Stephen DuBois, initiated the biggest position in Glaukos Corporation (NYSE:GKOS). Camber Capital Management had $28 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin’s Great Point Partners also made a $19.2 million investment in the stock during the quarter. The following funds were also among the new GKOS investors: Dmitry Balyasny’s Balyasny Asset Management, Benjamin A. Smith’s Laurion Capital Management, and Michael Gelband’s ExodusPoint Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Glaukos Corporation (NYSE:GKOS) but similarly valued. These stocks are Edgewell Personal Care Company (NYSE:EPC), Fluor Corporation (NYSE:FLR), Korn Ferry (NYSE:KFY), Heartland Express, Inc. (NASDAQ:HTLD), Phoenix Tree Holdings Limited (NYSE:DNK), BMC Stock Holdings, Inc. (NASDAQ:BMCH), and Jack in the Box Inc. (NASDAQ:JACK). This group of stocks’ market caps are similar to GKOS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EPC 20 209272 -5
FLR 20 102139 -4
KFY 28 167753 8
HTLD 13 46345 2
DNK 3 22665 0
BMCH 26 307670 3
JACK 31 291611 3
Average 20.1 163922 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $184 million in GKOS’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Phoenix Tree Holdings Limited (NYSE:DNK) is the least popular one with only 3 bullish hedge fund positions. Glaukos Corporation (NYSE:GKOS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GKOS is 60.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on GKOS as the stock returned 28.9% in the third quarter and outperformed the market by an even larger margin.

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