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Is GlaxoSmithKline plc (GSK) Going to Burn These Hedge Funds?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of GlaxoSmithKline plc (NYSE:GSK).

GlaxoSmithKline plc (NYSE:GSK) has seen an increase in hedge fund interest in recent months. Our calculations also showed that GSK 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.

In the eyes of most traders, hedge funds are seen as slow, old financial tools of years past. While there are more than 8000 funds trading today, Our researchers choose to focus on the masters of this group, approximately 850 funds. These hedge fund managers preside over the lion’s share of all hedge funds’ total asset base, and by paying attention to their finest picks, Insider Monkey has brought to light a number of investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year 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 .

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

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 stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind we’re going to go over the key hedge fund action encompassing GlaxoSmithKline plc (NYSE:GSK).

Hedge fund activity in GlaxoSmithKline plc (NYSE:GSK)

Heading into the second quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in GSK a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of GlaxoSmithKline plc (NYSE:GSK), with a stake worth $874.4 million reported as of the end of September. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $588.8 million. Camber Capital Management, Arrowstreet Capital, and Kahn Brothers 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 Kahn Brothers allocated the biggest weight to GlaxoSmithKline plc (NYSE:GSK), around 10.7% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, setting aside 6.79 percent of its 13F equity portfolio to GSK.

As aggregate interest increased, key money managers have jumped into GlaxoSmithKline plc (NYSE:GSK) headfirst. Camber Capital Management, managed by Stephen DuBois, initiated the most outsized position in GlaxoSmithKline plc (NYSE:GSK). Camber Capital Management had $113.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $31.9 million position during the quarter. The other funds with brand new GSK positions are Dmitry Balyasny’s Balyasny Asset Management, Peter S. Stamos’s Stamos Capital, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as GlaxoSmithKline plc (NYSE:GSK) but similarly valued. These stocks are Broadcom Inc. (NASDAQ:AVGO), Honeywell International Inc. (NYSE:HON), Gilead Sciences, Inc. (NASDAQ:GILD), and Texas Instruments Incorporated (NASDAQ:TXN). All of these stocks’ market caps match GSK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AVGO 50 1720031 -11
HON 44 1215105 -11
GILD 76 2832662 9
TXN 46 1744576 -4
Average 54 1878094 -4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $1878 million. That figure was $1953 million in GSK’s case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand Honeywell International Inc. (NYSE:HON) is the least popular one with only 44 bullish hedge fund positions. Compared to these stocks GlaxoSmithKline plc (NYSE:GSK) is even less popular than HON. Hedge funds dodged a bullet by taking a bearish stance towards GSK. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately GSK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); GSK investors were disappointed as the stock returned 11.9% during the second quarter (through the end of May) 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 so far in 2020.

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