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 752 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 September 30th. In this article we look at what those investors think of GenMark Diagnostics, Inc (NASDAQ:GNMK).
GenMark Diagnostics, Inc (NASDAQ:GNMK) was in 15 hedge funds’ portfolios at the end of the third quarter of 2019. GNMK has seen an increase in hedge fund sentiment recently. There were 14 hedge funds in our database with GNMK positions at the end of the previous quarter. Our calculations also showed that GNMK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s view the key hedge fund action encompassing GenMark Diagnostics, Inc (NASDAQ:GNMK).
How are hedge funds trading GenMark Diagnostics, Inc (NASDAQ:GNMK)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the second quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in GNMK a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Cadian Capital was the largest shareholder of GenMark Diagnostics, Inc (NASDAQ:GNMK), with a stake worth $34.2 million reported as of the end of September. Trailing Cadian Capital was Casdin Capital, which amassed a stake valued at $21.8 million. Renaissance Technologies, Alyeska Investment Group, and Millennium Management 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 Casdin Capital allocated the biggest weight to GenMark Diagnostics, Inc (NASDAQ:GNMK), around 2.18% of its 13F portfolio. Cadian Capital is also relatively very bullish on the stock, setting aside 1.63 percent of its 13F equity portfolio to GNMK.
As aggregate interest increased, some big names have jumped into GenMark Diagnostics, Inc (NASDAQ:GNMK) headfirst. ExodusPoint Capital, managed by Michael Gelband, initiated the largest position in GenMark Diagnostics, Inc (NASDAQ:GNMK). ExodusPoint Capital had $0.1 million invested in the company at the end of the quarter.
Let’s now review hedge fund activity in other stocks similar to GenMark Diagnostics, Inc (NASDAQ:GNMK). We will take a look at Dermira Inc (NASDAQ:DERM), Hallmark Financial Services, Inc. (NASDAQ:HALL), MediciNova, Inc. (NASDAQ:MNOV), and Citizens, Inc. (NYSE:CIA). This group of stocks’ market values are similar to GNMK’s market value.
|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 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $74 million in GNMK’s case. Dermira Inc (NASDAQ:DERM) is the most popular stock in this table. On the other hand MediciNova, Inc. (NASDAQ:MNOV) is the least popular one with only 2 bullish hedge fund positions. GenMark Diagnostics, Inc (NASDAQ:GNMK) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GNMK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GNMK were disappointed as the stock returned -7.9% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.