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Hedge Funds Have Never Been This Bullish On GW Pharmaceuticals plc (GWPH)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded GW Pharmaceuticals plc (NASDAQ:GWPH) based on those filings.

Is GW Pharmaceuticals plc (NASDAQ:GWPH) going to take off soon? Prominent investors are in an optimistic mood. The number of long hedge fund positions went up by 13 recently. Our calculations also showed that GWPH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most investors, hedge funds are assumed to be underperforming, old financial vehicles of the past. While there are over 8000 funds in operation at present, Our experts hone in on the upper echelon of this group, about 750 funds. These money managers watch over bulk of the hedge fund industry’s total capital, and by tailing their finest equity investments, Insider Monkey has uncovered many investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a glance at the new hedge fund action encompassing GW Pharmaceuticals plc (NASDAQ:GWPH).

How have hedgies been trading GW Pharmaceuticals plc (NASDAQ:GWPH)?

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 81% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in GWPH a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

GWPH_dec2019

The largest stake in GW Pharmaceuticals plc (NASDAQ:GWPH) was held by Citadel Investment Group, which reported holding $115.1 million worth of stock at the end of September. It was followed by Point72 Asset Management with a $104.8 million position. Other investors bullish on the company included Millennium Management, Baker Bros. Advisors, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Sio Capital allocated the biggest weight to GW Pharmaceuticals plc (NASDAQ:GWPH), around 6.66% of its portfolio. Pura Vida Investments is also relatively very bullish on the stock, earmarking 1.21 percent of its 13F equity portfolio to GWPH.

As one would reasonably expect, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the most valuable position in GW Pharmaceuticals plc (NASDAQ:GWPH). Millennium Management had $98.2 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $72.5 million position during the quarter. The other funds with brand new GWPH positions are Renaissance Technologies, Brandon Haley’s Holocene Advisors, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s also examine hedge fund activity in other stocks similar to GW Pharmaceuticals plc (NASDAQ:GWPH). These stocks are Teradata Corporation (NYSE:TDC), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), Graham Holdings Co (NYSE:GHC), and Clearway Energy, Inc. (NYSE:CWEN). This group of stocks’ market values are closest to GWPH’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TDC 20 247413 -2
BJ 23 275625 -10
GHC 17 551698 2
CWEN 20 182276 1
Average 20 314253 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $314 million. That figure was $509 million in GWPH’s case. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) is the most popular stock in this table. On the other hand Graham Holdings Co (NYSE:GHC) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks GW Pharmaceuticals plc (NASDAQ:GWPH) is more popular among hedge funds. 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 GWPH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GWPH were disappointed as the stock returned -11.2% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

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