Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s analyze whether Corning Incorporated (NYSE:GLW) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Is Corning Incorporated (NYSE:GLW) worth your attention right now? Money managers are becoming hopeful. The number of bullish hedge fund bets went up by 5 recently. Our calculations also showed that GLW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). GLW was in 35 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 30 hedge funds in our database with GLW 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.
To the average investor there are a multitude of metrics investors use to analyze publicly traded companies. Some of the most underrated metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top fund managers can outperform the S&P 500 by a very impressive amount (see the details here).
Phill Gross of Adage Capital Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the new hedge fund action encompassing Corning Incorporated (NYSE:GLW).
What does smart money think about Corning Incorporated (NYSE:GLW)?
Heading into the first quarter of 2020, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GLW over the last 18 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Masters Capital Management held the most valuable stake in Corning Incorporated (NYSE:GLW), which was worth $55.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $47.7 million worth of shares. Yacktman Asset Management, Adage Capital Management, and Citadel Investment Group 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 Valueworks LLC allocated the biggest weight to Corning Incorporated (NYSE:GLW), around 3.29% of its 13F portfolio. Masters Capital Management is also relatively very bullish on the stock, earmarking 3.15 percent of its 13F equity portfolio to GLW.
As aggregate interest increased, specific money managers were breaking ground themselves. Renaissance Technologies, founded by Jim Simons, created the largest position in Corning Incorporated (NYSE:GLW). Renaissance Technologies had $47.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $3.2 million investment in the stock during the quarter. The following funds were also among the new GLW investors: Ray Dalio’s Bridgewater Associates, Robert Richards’s Heathbridge Capital Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Corning Incorporated (NYSE:GLW) but similarly valued. We will take a look at United Airlines Holdings Inc (NASDAQ:UAL), ResMed Inc. (NYSE:RMD), Dollar Tree, Inc. (NASDAQ:DLTR), and American Water Works Company, Inc. (NYSE:AWK). All of these stocks’ market caps are closest to GLW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UAL | 62 | 6947983 | 10 |
| RMD | 21 | 172399 | -2 |
| DLTR | 51 | 1620166 | -1 |
| AWK | 29 | 625913 | -11 |
| Average | 40.75 | 2341615 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.75 hedge funds with bullish positions and the average amount invested in these stocks was $2342 million. That figure was $222 million in GLW’s case. United Airlines Holdings Inc (NASDAQ:UAL) is the most popular stock in this table. On the other hand ResMed Inc. (NYSE:RMD) is the least popular one with only 21 bullish hedge fund positions. Corning Incorporated (NYSE:GLW) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but beat the market by 3.1 percentage points. Unfortunately GLW wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GLW investors were disappointed as the stock returned -19.8% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
