Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Global Cord Blood Corporation (NYSE:CO), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Global Cord Blood Corporation (NYSE:CO) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of the fourth quarter of 2018. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Granite Point Mortgage Trust Inc. (NYSE:GPMT), Ambac Financial Group, Inc. (NASDAQ:AMBC), and HealthStream, Inc. (NASDAQ:HSTM) to gather more data points.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the latest hedge fund action encompassing Global Cord Blood Corporation (NYSE:CO).
What does the smart money think about Global Cord Blood Corporation (NYSE:CO)?
At Q4’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CO over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Global Cord Blood Corporation (NYSE:CO), with a stake worth $16.7 million reported as of the end of December. Trailing Renaissance Technologies was Rock Springs Capital Management, which amassed a stake valued at $6 million. GLG Partners, PEAK6 Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Global Cord Blood Corporation (NYSE:CO) but similarly valued. These stocks are Granite Point Mortgage Trust Inc. (NYSE:GPMT), Ambac Financial Group, Inc. (NASDAQ:AMBC), HealthStream, Inc. (NASDAQ:HSTM), and Cass Information Systems, Inc. (NASDAQ:CASS). All of these stocks’ market caps are similar to CO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GPMT | 6 | 12976 | 0 |
| AMBC | 17 | 142221 | -4 |
| HSTM | 14 | 48729 | 3 |
| CASS | 8 | 14771 | 1 |
| Average | 11.25 | 54674 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $29 million in CO’s case. Ambac Financial Group, Inc. (NASDAQ:AMBC) is the most popular stock in this table. On the other hand Granite Point Mortgage Trust Inc. (NYSE:GPMT) is the least popular one with only 6 bullish hedge fund positions. Global Cord Blood Corporation (NYSE:CO) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CO wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); CO investors were disappointed as the stock returned 5.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
