The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Galera Therapeutics, Inc. (NASDAQ:GRTX).
Galera Therapeutics, Inc. (NASDAQ:GRTX) shareholders have witnessed a decrease in hedge fund interest lately. GRTX was in 5 hedge funds’ portfolios at the end of March. There were 6 hedge funds in our database with GRTX holdings at the end of the previous quarter. Our calculations also showed that GRTX 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind let’s go over the key hedge fund action encompassing Galera Therapeutics, Inc. (NASDAQ:GRTX).
Hedge fund activity in Galera Therapeutics, Inc. (NASDAQ:GRTX)
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GRTX over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in Galera Therapeutics, Inc. (NASDAQ:GRTX). Adage Capital Management has a $12.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Peter Kolchinsky of RA Capital Management, with a $8.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions encompass Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund and Joseph Edelman’s Perceptive Advisors. In terms of the portfolio weights assigned to each position Sphera Global Healthcare Fund allocated the biggest weight to Galera Therapeutics, Inc. (NASDAQ:GRTX), around 0.57% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, designating 0.27 percent of its 13F equity portfolio to GRTX.
Due to the fact that Galera Therapeutics, Inc. (NASDAQ:GRTX) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of funds that slashed their full holdings in the first quarter. At the top of the heap, Israel Englander’s Millennium Management dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising close to $0.7 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund sold off about $0 million worth. These bearish behaviors 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 similar to Galera Therapeutics, Inc. (NASDAQ:GRTX). We will take a look at Minerva Neurosciences, Inc (NASDAQ:NERV), Houghton Mifflin Harcourt Co (NASDAQ:HMHC), PAR Technology Corporation (NYSE:PAR), and RGC Resources, Inc. (NASDAQ:RGCO). This group of stocks’ market valuations resemble GRTX’s market valuation.
|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 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $33 million in GRTX’s case. Houghton Mifflin Harcourt Co (NASDAQ:HMHC) is the most popular stock in this table. On the other hand RGC Resources, Inc. (NASDAQ:RGCO) is the least popular one with only 1 bullish hedge fund positions. Galera Therapeutics, Inc. (NASDAQ:GRTX) 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 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately GRTX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); GRTX investors were disappointed as the stock returned 10.1% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.