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Is Glu Mobile Inc. (GLUU) Going To Burn These Hedge Funds ?

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by 4 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Glu Mobile Inc. (NASDAQ:GLUU).

Is Glu Mobile Inc. (NASDAQ:GLUU) a superb investment right now? The smart money is selling. The number of bullish hedge fund positions dropped by 2 in recent months. Our calculations also showed that GLUU isn’t among the 30 most popular stocks among hedge funds (see the video below). GLUU was in 23 hedge funds’ portfolios at the end of the second quarter of 2019. There were 25 hedge funds in our database with GLUU positions at the end of the previous quarter.
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’ 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 40 percentage points since May 2014 through May 30, 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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

GLUU_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the key hedge fund action encompassing Glu Mobile Inc. (NASDAQ:GLUU).

How have hedgies been trading Glu Mobile Inc. (NASDAQ:GLUU)?

At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in GLUU a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

COATUE MANAGEMENT

When looking at the institutional investors followed by Insider Monkey, Highline Capital Management, managed by Jacob Doft, holds the number one position in Glu Mobile Inc. (NASDAQ:GLUU). Highline Capital Management has a $22.3 million position in the stock, comprising 1.6% of its 13F portfolio. On Highline Capital Management’s heels is Alyeska Investment Group, managed by Anand Parekh, which holds a $21.9 million position; 0.3% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism include Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.

Due to the fact that Glu Mobile Inc. (NASDAQ:GLUU) has witnessed falling interest from hedge fund managers, we can see that there lies a certain “tier” of money managers that elected to cut their entire stakes in the second quarter. Interestingly, Sander Gerber’s Hudson Bay Capital Management cut the biggest position of the “upper crust” of funds followed by Insider Monkey, worth about $3.9 million in call options, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund sold off about $2.8 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to Glu Mobile Inc. (NASDAQ:GLUU). We will take a look at Camping World Holdings, Inc. (NYSE:CWH), NanoString Technologies Inc (NASDAQ:NSTG), TTM Technologies, Inc. (NASDAQ:TTMI), and Granite Point Mortgage Trust Inc. (NYSE:GPMT). This group of stocks’ market values resemble GLUU’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CWH 9 106511 -1
NSTG 20 210626 -2
TTMI 9 18782 -4
GPMT 9 20565 -3
Average 11.75 89121 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $117 million in GLUU’s case. NanoString Technologies Inc (NASDAQ:NSTG) is the most popular stock in this table. On the other hand Camping World Holdings, Inc. (NYSE:CWH) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Glu Mobile Inc. (NASDAQ:GLUU) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GLUU wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GLUU were disappointed as the stock returned -30.5% during the third 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 many of these stocks already outperformed the market in Q3.

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

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