Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Genomic Health, Inc. (NASDAQ:GHDX) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare GHDX to other stocks including Rush Enterprises, Inc. (NASDAQ:RUSHB), Acorda Therapeutics Inc (NASDAQ:ACOR), and Trueblue Inc (NYSE:TBI) to get a better sense of its popularity.
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Follow Genomic Health Inc (NASDAQ:GHDX)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s check out the key action surrounding Genomic Health, Inc. (NASDAQ:GHDX).
What have hedge funds been doing with Genomic Health, Inc. (NASDAQ:GHDX)?
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. The graph below displays the number of hedge funds with bullish position in GHDX over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Julian Baker and Felix Baker of Baker Bros. Advisors holds the number one position in Genomic Health, Inc. (NASDAQ:GHDX) which has a $398.2 million position in the stock, comprising 3.6% of its 13F portfolio. Coming in second is Stephen DuBois of Camber Capital Management holding a $71.1 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism consist of Millennium Management, one of the 10 biggest hedge funds in the world, Jim Simons’ Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cut their entire stakes in the stock during the third quarter. It’s worth mentioning that Kevin Kotler’s Broadfin Capital cut the largest investment of the “upper crust” of funds watched by Insider Monkey, valued at about $7 million in stock, and Malcolm Fairbairn’s Ascend Capital was right behind this move, as the fund said goodbye to about $1.9 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Genomic Health, Inc. (NASDAQ:GHDX) but similarly valued. These stocks are Rush Enterprises, Inc. (NASDAQ:RUSHB), Acorda Therapeutics Inc (NASDAQ:ACOR), Trueblue Inc (NYSE:TBI), and Kronos Worldwide, Inc. (NYSE:KRO). This group of stocks’ market caps are closest to GHDX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $528 million in GHDX’s case. Acorda Therapeutics Inc (NASDAQ:ACOR) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 4 bullish hedge fund positions. Genomic Health, Inc. (NASDAQ:GHDX) is the most popular stock in this group (GHDX and ACOR have the same number of hedge funds but hedge funds invested more money in GHDX). This is a positive signal and we believe investors should consider taking a long position in GHDX.