Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds.
Is GlycoMimetics, Inc. (NASDAQ:GLYC) a bargain? The best stock pickers are getting more bullish. The number of long hedge fund positions rose by 1 in recent months. Our calculations also showed that GLYC isn’t among the 30 most popular stocks among hedge funds (see the video below). GLYC was in 9 hedge funds’ portfolios at the end of June. There were 8 hedge funds in our database with GLYC positions at the end of the previous quarter.
Video: Click the image to 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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the new hedge fund action encompassing GlycoMimetics, Inc. (NASDAQ:GLYC).
How have hedgies been trading GlycoMimetics, Inc. (NASDAQ:GLYC)?
At Q2’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in GLYC a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Jeremy Green’s Redmile Group has the number one position in GlycoMimetics, Inc. (NASDAQ:GLYC), worth close to $23.9 million, corresponding to 0.7% of its total 13F portfolio. The second most bullish fund manager is Jerome Pfund and Michael Sjostrom of Sectoral Asset Management, with a $6.6 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Noam Gottesman’s GLG Partners, Ken Griffin’s Citadel Investment Group and Sander Gerber’s Hudson Bay Capital Management.
As one would reasonably expect, key money managers were leading the bulls’ herd. Endurant Capital Management, managed by Vishal Saluja and Pham Quang, assembled the most valuable position in GlycoMimetics, Inc. (NASDAQ:GLYC). Endurant Capital Management had $0.5 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as GlycoMimetics, Inc. (NASDAQ:GLYC) but similarly valued. These stocks are Whitestone REIT (NYSE:WSR), CURO Group Holdings Corp. (NYSE:CURO), Meridian Bioscience, Inc. (NASDAQ:VIVO), and Teekay Offshore Partners L.P. (NYSE:TOO). This group of stocks’ market caps are similar to GLYC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $46 million in GLYC’s case. Meridian Bioscience, Inc. (NASDAQ:VIVO) is the most popular stock in this table. On the other hand Whitestone REIT (NYSE:WSR) is the least popular one with only 4 bullish hedge fund positions. GlycoMimetics, Inc. (NASDAQ:GLYC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GLYC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GLYC investors were disappointed as the stock returned -63.8% during the third quarter 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.