Hedge Funds Are Selling Gossamer Bio, Inc. (GOSS)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Gossamer Bio, Inc. (NASDAQ:GOSS).

Gossamer Bio, Inc. (NASDAQ:GOSS) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 21. GOSS has experienced a decrease in hedge fund sentiment lately. There were 20 hedge funds in our database with GOSS positions at the end of the fourth quarter. Our calculations also showed that GOSS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Michael Castor of Sio Capital

Michael Castor of Sio Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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 let’s take a peek at the key hedge fund action surrounding Gossamer Bio, Inc. (NASDAQ:GOSS).

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

At the end of March, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the fourth quarter of 2020. On the other hand, there were a total of 10 hedge funds with a bullish position in GOSS a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GOSS A Good Stock To Buy?

The largest stake in Gossamer Bio, Inc. (NASDAQ:GOSS) was held by Hillhouse Capital Management, which reported holding $68.6 million worth of stock at the end of December. It was followed by Palo Alto Investors with a $16.4 million position. Other investors bullish on the company included Octagon Capital Advisors, Ikarian Capital, and Cormorant Asset Management. In terms of the portfolio weights assigned to each position Octagon Capital Advisors allocated the biggest weight to Gossamer Bio, Inc. (NASDAQ:GOSS), around 4.92% of its 13F portfolio. Parkman Healthcare Partners is also relatively very bullish on the stock, setting aside 1.25 percent of its 13F equity portfolio to GOSS.

Due to the fact that Gossamer Bio, Inc. (NASDAQ:GOSS) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds that decided to sell off their positions entirely by the end of the first quarter. At the top of the heap, Oleg Nodelman’s EcoR1 Capital cut the biggest position of all the hedgies monitored by Insider Monkey, worth close to $27.2 million in stock. Julian Baker and Felix Baker’s fund, Baker Bros. Advisors, also dropped its stock, about $4.6 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Gossamer Bio, Inc. (NASDAQ:GOSS) but similarly valued. We will take a look at Ethan Allen Interiors Inc. (NYSE:ETH), Qutoutiao Inc. (NASDAQ:QTT), Tian Ruixiang Holdings Ltd (NASDAQ:TIRX), The ExOne Company (NASDAQ:XONE), Heidrick & Struggles International, Inc. (NASDAQ:HSII), Bright Scholar Education Holdings Limited (NYSE:BEDU), and Winmark Corporation (NASDAQ:WINA). This group of stocks’ market valuations resemble GOSS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ETH 13 45423 -1
QTT 4 2833 1
TIRX 1 763 1
XONE 8 110929 -2
HSII 17 111444 5
BEDU 7 65735 1
WINA 10 86703 -1
Average 8.6 60547 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $158 million in GOSS’s case. Heidrick & Struggles International, Inc. (NASDAQ:HSII) is the most popular stock in this table. On the other hand Tian Ruixiang Holdings Ltd (NASDAQ:TIRX) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Gossamer Bio, Inc. (NASDAQ:GOSS) is more popular among hedge funds. Our overall hedge fund sentiment score for GOSS is 81.1. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately GOSS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GOSS were disappointed as the stock returned -21% since the end of the first quarter (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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