Hedge Funds Never Loved Grifols SA (GRFS) More

In this article we will take a look at whether hedge funds think Grifols SA (NASDAQ:GRFS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Grifols SA (NASDAQ:GRFS) was in 23 hedge funds’ portfolios at the end of the first quarter of 2020. GRFS has seen an increase in hedge fund sentiment lately. There were 21 hedge funds in our database with GRFS holdings at the end of the previous quarter. Our calculations also showed that GRFS 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.

According to most traders, hedge funds are seen as unimportant, outdated investment tools of the past. While there are over 8000 funds trading at the moment, We choose to focus on the leaders of this club, about 850 funds. These investment experts handle bulk of all hedge funds’ total asset base, and by keeping track of their inimitable equity investments, Insider Monkey has revealed a number of investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Andy Redleaf Andrew Redleaf Whitebox Advisors

Andy Redleaf of Whitebox Advisors

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 trades like this one. 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. Keeping this in mind we’re going to check out the recent hedge fund action encompassing Grifols SA (NASDAQ:GRFS).

Hedge fund activity in Grifols SA (NASDAQ:GRFS)

At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the fourth quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in GRFS 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.

More specifically, Ako Capital was the largest shareholder of Grifols SA (NASDAQ:GRFS), with a stake worth $266.7 million reported as of the end of September. Trailing Ako Capital was Farallon Capital, which amassed a stake valued at $62.7 million. Whitebox Advisors, Nitorum Capital, 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 Soleus Capital allocated the biggest weight to Grifols SA (NASDAQ:GRFS), around 9.07% of its 13F portfolio. Ako Capital is also relatively very bullish on the stock, earmarking 5.62 percent of its 13F equity portfolio to GRFS.

As one would reasonably expect, key hedge funds have been driving this bullishness. Nitorum Capital, managed by Seth Rosen, assembled the largest position in Grifols SA (NASDAQ:GRFS). Nitorum Capital had $53.6 million invested in the company at the end of the quarter. Ross Turner’s Pelham Capital also made a $13.4 million investment in the stock during the quarter. The other funds with brand new GRFS positions are Michael Hintze’s CQS Cayman LP, Dmitry Balyasny’s Balyasny Asset Management, and Greg Eisner’s Engineers Gate Manager.

Let’s now review hedge fund activity in other stocks similar to Grifols SA (NASDAQ:GRFS). We will take a look at Genmab A/S (NASDAQ:GMAB), Align Technology, Inc. (NASDAQ:ALGN), Teleflex Incorporated (NYSE:TFX), and Avangrid, Inc. (NYSE:AGR). All of these stocks’ market caps are closest to GRFS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GMAB 14 130319 2
ALGN 39 1396832 -1
TFX 32 766334 0
AGR 18 242937 -1
Average 25.75 634106 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $634 million. That figure was $700 million in GRFS’s case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 14 bullish hedge fund positions. Grifols SA (NASDAQ:GRFS) 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately GRFS wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); GRFS investors were disappointed as the stock returned -2% 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.

Follow Grifols Sa (NASDAQ:GRFS)

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