Hedge Funds Are Cutting Exposure To Globant SA (GLOB)

In this article we will take a look at whether hedge funds think Globant SA (NYSE:GLOB) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Globant SA (NYSE:GLOB) has experienced a decrease in hedge fund interest of late. GLOB was in 17 hedge funds’ portfolios at the end of the first quarter of 2020. There were 18 hedge funds in our database with GLOB holdings at the end of the previous quarter. Our calculations also showed that GLOB 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.

To the average investor there are a large number of methods shareholders put to use to appraise their stock investments. A pair of the most innovative methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the S&P 500 by a solid margin (see the details here).

James Dondero Highland Capital Management

James Dondero of Highland Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the new hedge fund action encompassing Globant SA (NYSE:GLOB).

What have hedge funds been doing with Globant SA (NYSE:GLOB)?

Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GLOB over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Is GLOB A Good Stock To Buy?

More specifically, Fisher Asset Management was the largest shareholder of Globant SA (NYSE:GLOB), with a stake worth $44.2 million reported as of the end of September. Trailing Fisher Asset Management was Driehaus Capital, which amassed a stake valued at $15.7 million. GLG Partners, Sloane Robinson Investment 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 Sloane Robinson Investment Management allocated the biggest weight to Globant SA (NYSE:GLOB), around 6.82% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, designating 0.53 percent of its 13F equity portfolio to GLOB.

Because Globant SA (NYSE:GLOB) has experienced falling interest from the smart money, we can see that there lies a certain “tier” of money managers who were dropping their positions entirely in the first quarter. At the top of the heap, James Dondero’s Highland Capital Management dropped the largest investment of all the hedgies tracked by Insider Monkey, comprising about $1.3 million in stock, and Qing Li’s Sciencast Management was right behind this move, as the fund cut about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds in the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Globant SA (NYSE:GLOB) but similarly valued. We will take a look at Axis Capital Holdings Limited (NYSE:AXS), Cyberark Software Ltd (NASDAQ:CYBR), New Jersey Resources Corp (NYSE:NJR), and Gerdau SA (NYSE:GGB). This group of stocks’ market valuations are closest to GLOB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AXS 32 593560 -2
CYBR 14 133983 -6
NJR 14 36464 -6
GGB 12 88520 5
Average 18 213132 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $81 million in GLOB’s case. Axis Capital Holdings Limited (NYSE:AXS) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 12 bullish hedge fund positions. Globant SA (NYSE:GLOB) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on GLOB as the stock returned 63.9% during the second quarter and outperformed the market by an even larger margin.

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