At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Global Blood Therapeutics Inc (NASDAQ:GBT) makes for a good investment right now.
Is Global Blood Therapeutics Inc (NASDAQ:GBT) a buy, sell, or hold? Hedge funds were getting less optimistic. The number of bullish hedge fund bets were trimmed by 7 lately. Global Blood Therapeutics Inc (NASDAQ:GBT) was in 19 hedge funds’ portfolios at the end of March. The all time high for this statistic is 31. Our calculations also showed that GBT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 26 hedge funds in our database with GBT holdings at the end of December.
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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 analyze the latest hedge fund action surrounding Global Blood Therapeutics Inc (NASDAQ:GBT).
Do Hedge Funds Think GBT 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 -27% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in GBT over the last 23 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Global Blood Therapeutics Inc (NASDAQ:GBT) was held by Perceptive Advisors, which reported holding $206.1 million worth of stock at the end of December. It was followed by Baker Bros. Advisors with a $131.1 million position. Other investors bullish on the company included Point72 Asset Management, Citadel Investment Group, and Casdin Capital. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to Global Blood Therapeutics Inc (NASDAQ:GBT), around 2.61% of its 13F portfolio. Arctis Global is also relatively very bullish on the stock, dishing out 1.7 percent of its 13F equity portfolio to GBT.
Seeing as Global Blood Therapeutics Inc (NASDAQ:GBT) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedgies who were dropping their positions entirely by the end of the first quarter. At the top of the heap, Jeffrey Jay and David Kroin’s Great Point Partners said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $25.8 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund cut about $11.6 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 7 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 Global Blood Therapeutics Inc (NASDAQ:GBT) but similarly valued. These stocks are Ligand Pharmaceuticals Inc. (NASDAQ:LGND), Murphy Oil Corporation (NYSE:MUR), First Merchants Corporation (NASDAQ:FRME), The St. Joe Company (NYSE:JOE), Callaway Golf Company (NYSE:ELY), UP Fintech Holding Limited (NASDAQ:TIGR), and First Midwest Bancorp Inc (NASDAQ:FMBI). This group of stocks’ market valuations are closest to GBT’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 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $320 million. That figure was $595 million in GBT’s case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand First Merchants Corporation (NASDAQ:FRME) is the least popular one with only 11 bullish hedge fund positions. Global Blood Therapeutics Inc (NASDAQ:GBT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GBT is 30.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 7.7 percentage points. Unfortunately GBT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GBT were disappointed as the stock returned -21.8% since the end of March (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 many of these stocks already outperformed the market since 2019.
Follow Global Blood Therapeutics Inc. (NASDAQ:GBT)
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Disclosure: None. This article was originally published at Insider Monkey.