Were Hedge Funds Right About GlaxoSmithKline plc (GSK)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about GlaxoSmithKline plc (NYSE:GSK) in this article.

GlaxoSmithKline plc (NYSE:GSK) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. GlaxoSmithKline plc (NYSE:GSK) was in 28 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that GSK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most stock holders, hedge funds are viewed as slow, outdated financial tools of the past. While there are more than 8000 funds in operation today, We choose to focus on the moguls of this club, approximately 850 funds. Most estimates calculate that this group of people shepherd the majority of the smart money’s total capital, and by following their highest performing equity investments, Insider Monkey has determined a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

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 are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to review the fresh hedge fund action encompassing GlaxoSmithKline plc (NYSE:GSK).

Do Hedge Funds Think GSK Is A Good Stock To Buy Now?

At second quarter’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GSK over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in GlaxoSmithKline plc (NYSE:GSK) was held by Fisher Asset Management, which reported holding $698.8 million worth of stock at the end of June. It was followed by Renaissance Technologies with a $360.8 million position. Other investors bullish on the company included Camber Capital Management, Arrowstreet Capital, and Kahn Brothers. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to GlaxoSmithKline plc (NYSE:GSK), around 7.93% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, earmarking 7.4 percent of its 13F equity portfolio to GSK.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Point State Capital, managed by Zach Schreiber, established the largest position in GlaxoSmithKline plc (NYSE:GSK). Point State Capital had $6.8 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $4.5 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Kenneth Mario Garschina’s Mason Capital Management, and D. E. Shaw’s D E Shaw.

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 S&P Global Inc. (NYSE:SPGI), Stryker Corporation (NYSE:SYK), Micron Technology, Inc. (NASDAQ:MU), Moderna, Inc. (NASDAQ:MRNA), Uber Technologies, Inc. (NYSE:UBER), Anthem Inc (NYSE:ANTM), and Lam Research Corporation (NASDAQ:LRCX). This group of stocks’ market caps match GSK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 71.9 hedge funds with bullish positions and the average amount invested in these stocks was $5958 million. That figure was $1466 million in GSK’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand Moderna, Inc. (NASDAQ:MRNA) is the least popular one with only 37 bullish hedge fund positions. Compared to these stocks GlaxoSmithKline plc (NYSE:GSK) is even less popular than MRNA. Our overall hedge fund sentiment score for GSK is 32. 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. Hedge funds clearly dropped the ball on GSK as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 through November 5th and still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on GSK as the stock returned 10.6% since Q2 (through November 5th) and outperformed the market by an even larger margin.

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