In this article we will take a look at whether hedge funds think Galapagos NV (NASDAQ:GLPG) 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.
Is Galapagos NV (GLPG) a good stock to buy now? Prominent investors were in a pessimistic mood. The number of long hedge fund positions were trimmed by 1 recently. Galapagos NV (NASDAQ:GLPG) was in 22 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that GLPG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 23 hedge funds in our database with GLPG positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s check out the latest hedge fund action surrounding Galapagos NV (NASDAQ:GLPG).
Do Hedge Funds Think GLPG Is A Good Stock To Buy Now?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GLPG over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, EcoR1 Capital, managed by Oleg Nodelman, holds the most valuable position in Galapagos NV (NASDAQ:GLPG). EcoR1 Capital has a $82 million position in the stock, comprising 2.9% of its 13F portfolio. Sitting at the No. 2 spot is Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, which holds a $58.9 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions encompass OrbiMed Advisors, Ari Zweiman’s 683 Capital Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to Galapagos NV (NASDAQ:GLPG), around 7.26% of its 13F portfolio. Stonepine Capital is also relatively very bullish on the stock, designating 5.85 percent of its 13F equity portfolio to GLPG.
Due to the fact that Galapagos NV (NASDAQ:GLPG) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there were a few funds that decided to sell off their full holdings heading into Q4. It’s worth mentioning that James E. Flynn’s Deerfield Management dumped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $45.3 million in stock. Kris Jenner, Gordon Bussard, Graham McPhail’s fund, Rock Springs Capital Management, also cut its stock, about $11.4 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Galapagos NV (NASDAQ:GLPG). These stocks are Blackbaud, Inc. (NASDAQ:BLKB), ContextLogic Inc. (NASDAQ:WISH), AAON, Inc. (NASDAQ:AAON), Itron, Inc. (NASDAQ:ITRI), Assured Guaranty Ltd. (NYSE:AGO), Skyline Champion Corporation (NYSE:SKY), and Camping World Holdings, Inc. (NYSE:CWH). This group of stocks’ market values resemble GLPG’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 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $343 million in GLPG’s case. Skyline Champion Corporation (NYSE:SKY) is the most popular stock in this table. On the other hand ContextLogic Inc. (NASDAQ:WISH) is the least popular one with only 14 bullish hedge fund positions. Galapagos NV (NASDAQ:GLPG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GLPG is 66. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately GLPG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GLPG were disappointed as the stock returned 4.8% since the end of September (through 12/31) 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.
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Disclosure: None. This article was originally published at Insider Monkey.