The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Gores Metropoulos, Inc. (NASDAQ:GMHI) based on those filings.
Gores Metropoulos, Inc. (NASDAQ:GMHI) was in 16 hedge funds’ portfolios at the end of the first quarter of 2020. GMHI investors should be aware of a decrease in hedge fund interest in recent months. There were 17 hedge funds in our database with GMHI holdings at the end of the previous quarter. Our calculations also showed that GMHI 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.
If you’d ask most traders, hedge funds are perceived as worthless, outdated financial tools of yesteryear. While there are greater than 8000 funds trading at the moment, Our researchers choose to focus on the masters of this group, about 850 funds. It is estimated that this group of investors orchestrate most of the smart money’s total capital, and by tailing their matchless stock picks, Insider Monkey has discovered several investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s check out the fresh hedge fund action regarding Gores Metropoulos, Inc. (NASDAQ:GMHI).
How are hedge funds trading Gores Metropoulos, Inc. (NASDAQ:GMHI)?
Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the fourth quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in GMHI a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Gores Metropoulos, Inc. (NASDAQ:GMHI) was held by Governors Lane, which reported holding $20.3 million worth of stock at the end of September. It was followed by Element Capital Management with a $18.3 million position. Other investors bullish on the company included Millennium Management, Magnetar Capital, and Glazer Capital. In terms of the portfolio weights assigned to each position Element Capital Management allocated the biggest weight to Gores Metropoulos, Inc. (NASDAQ:GMHI), around 17.04% of its 13F portfolio. Governors Lane is also relatively very bullish on the stock, dishing out 2.82 percent of its 13F equity portfolio to GMHI.
Due to the fact that Gores Metropoulos, Inc. (NASDAQ:GMHI) has faced falling interest from the smart money, it’s safe to say that there exists a select few fund managers who were dropping their entire stakes heading into Q4. Interestingly, Jeffrey Talpins’s Element Capital Management dropped the largest investment of all the hedgies followed by Insider Monkey, comprising about $19.1 million in stock, and Greg Poole’s Echo Street Capital Management was right behind this move, as the fund dumped about $6.1 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Gores Metropoulos, Inc. (NASDAQ:GMHI) but similarly valued. We will take a look at Colony Credit Real Estate, Inc. (NYSE:CLNC), Gladstone Commercial Corporation (NASDAQ:GOOD), Ardelyx Inc (NASDAQ:ARDX), and Lantheus Holdings Inc (NASDAQ:LNTH). All of these stocks’ market caps are similar to GMHI’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 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $134 million in GMHI’s case. Ardelyx Inc (NASDAQ:ARDX) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 8 bullish hedge fund positions. Gores Metropoulos, Inc. (NASDAQ:GMHI) 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 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately GMHI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GMHI were disappointed as the stock returned 4.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.