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Is Galectin Therapeutics Inc. (GALT) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent 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 funds think of Galectin Therapeutics Inc. (NASDAQ:GALT) based on that data.

Galectin Therapeutics Inc. (NASDAQ:GALT) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that GALT 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.

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’ 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.

Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s review the key hedge fund action regarding Galectin Therapeutics Inc. (NASDAQ:GALT).

What does smart money think about Galectin Therapeutics Inc. (NASDAQ:GALT)?

At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GALT over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Galectin Therapeutics Inc. (NASDAQ:GALT) was held by Winton Capital Management, which reported holding $0.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $0.1 million position. Other investors bullish on the company included HighVista Strategies, D E Shaw, and Millennium Management. In terms of the portfolio weights assigned to each position HighVista Strategies allocated the biggest weight to Galectin Therapeutics Inc. (NASDAQ:GALT), around 0.05% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.0013 percent of its 13F equity portfolio to GALT.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in Galectin Therapeutics Inc. (NASDAQ:GALT). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Andre F. Perold’s HighVista Strategies also initiated a $0.1 million position during the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Galectin Therapeutics Inc. (NASDAQ:GALT) but similarly valued. These stocks are Entegra Financial Corp (NASDAQ:ENFC), Sutro Biopharma, Inc. (NASDAQ:STRO), Kamada Ltd (NASDAQ:KMDA), and Asanko Gold Inc (NYSE:AKG). All of these stocks’ market caps are closest to GALT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ENFC 6 18780 1
STRO 10 38528 0
KMDA 3 4461 0
AKG 5 28345 -1
Average 6 22529 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $0 million in GALT’s case. Sutro Biopharma, Inc. (NASDAQ:STRO) is the most popular stock in this table. On the other hand Kamada Ltd (NASDAQ:KMDA) is the least popular one with only 3 bullish hedge fund positions. Galectin Therapeutics Inc. (NASDAQ:GALT) 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 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 GALT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GALT investors were disappointed as the stock returned -12% 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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