Hedge Funds Are Dumping GlaxoSmithKline plc (GSK)

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards GlaxoSmithKline plc (NYSE:GSK).

Is GlaxoSmithKline plc (NYSE:GSK) a buy right now? Prominent investors were becoming less hopeful. The number of bullish hedge fund positions decreased by 5 lately. GlaxoSmithKline plc (NYSE:GSK) was in 25 hedge funds’ portfolios at the end of March. The all time high for this statistic is 35. Our calculations also showed that GSK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Michael Castor Sio Capital

Michael Castor of Sio Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a glance at the fresh hedge fund action surrounding GlaxoSmithKline plc (NYSE:GSK).

Do Hedge Funds Think GSK Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GSK over the last 23 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

The largest stake in GlaxoSmithKline plc (NYSE:GSK) was held by Fisher Asset Management, which reported holding $607.5 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $312.8 million position. Other investors bullish on the company included Arrowstreet Capital, Camber Capital Management, and Kahn Brothers. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to GlaxoSmithKline plc (NYSE:GSK), around 7.95% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, earmarking 6.99 percent of its 13F equity portfolio to GSK.

Seeing as GlaxoSmithKline plc (NYSE:GSK) has faced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of money managers that decided to sell off their positions entirely by the end of the first quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $9.4 million in stock. Matthew Stadelman’s fund, Diamond Hill Capital, also said goodbye to its stock, about $5.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to GlaxoSmithKline plc (NYSE:GSK). These stocks are Vale SA (NYSE:VALE), British American Tobacco plc (NYSE:BTI), Anthem Inc (NYSE:ANTM), Intuitive Surgical, Inc. (NASDAQ:ISRG), Fidelity National Information Services Inc. (NYSE:FIS), Lam Research Corporation (NASDAQ:LRCX), and S&P Global Inc. (NYSE:SPGI). This group of stocks’ market valuations are similar to GSK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VALE 31 2615665 -4
BTI 14 1034777 4
ANTM 58 5373054 -12
ISRG 53 2326096 4
FIS 74 8251021 -14
LRCX 54 3164975 -2
SPGI 66 6245296 -9
Average 50 4144412 -4.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 50 hedge funds with bullish positions and the average amount invested in these stocks was $4144 million. That figure was $1360 million in GSK’s case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 14 bullish hedge fund positions. GlaxoSmithKline plc (NYSE:GSK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GSK is 30.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on GSK, though not to the same extent, as the stock returned 14.1% since the end of Q1 (through July 9th) and outperformed the market.

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