Were These Hedge Funds Right About Warming Up To Globant SA (GLOB)?

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.4% through the end of November and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Globant SA (NYSE:GLOB) was in 16 hedge funds’ portfolios at the end of September. GLOB has seen an increase in hedge fund sentiment in recent months. There were 14 hedge funds in our database with GLOB positions at the end of the previous quarter. Our calculations also showed that GLOB 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.

In the 21st century investor’s toolkit there are numerous metrics shareholders can use to value their stock investments. Two of the most useful metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite money managers can trounce the broader indices by a significant margin (see the details here).

James Dondero Highland Capital Management

James Dondero of Highland Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the recent hedge fund action surrounding Globant SA (NYSE:GLOB).

How have hedgies been trading Globant SA (NYSE:GLOB)?

At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GLOB over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Driehaus Capital, managed by Richard Driehaus, holds the number one position in Globant SA (NYSE:GLOB). Driehaus Capital has a $25.3 million position in the stock, comprising 0.8% of its 13F portfolio. Coming in second is GLG Partners, managed by Noam Gottesman, which holds a $11.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish consist of Hugh Sloane’s Sloane Robinson Investment Management, Robert B. Gillam’s McKinley Capital Management and Joel Greenblatt’s Gotham Asset Management. In terms of the portfolio weights assigned to each position Sloane Robinson Investment Management allocated the biggest weight to Globant SA (NYSE:GLOB), around 5% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, setting aside 0.82 percent of its 13F equity portfolio to GLOB.

Now, key money managers have been driving this bullishness. Highland Capital Management, managed by James Dondero, created the most outsized position in Globant SA (NYSE:GLOB). Highland Capital Management had $0.8 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.6 million position during the quarter. The other funds with brand new GLOB positions are Ken Griffin’s Citadel Investment Group and Michael Gelband’s ExodusPoint Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Globant SA (NYSE:GLOB) but similarly valued. We will take a look at Sanderson Farms, Inc. (NASDAQ:SAFM), The Goodyear Tire & Rubber Company (NASDAQ:GT), Silgan Holdings Inc. (NASDAQ:SLGN), and ASGN Incorporated (NYSE:ASGN). This group of stocks’ market valuations are similar to GLOB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAFM 23 410866 3
GT 27 632153 -3
SLGN 16 220385 -2
ASGN 14 177280 -7
Average 20 360171 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $360 million. That figure was $70 million in GLOB’s case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand ASGN Incorporated (NYSE:ASGN) is the least popular one with only 14 bullish hedge fund positions. Globant SA (NYSE:GLOB) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on GLOB as the stock returned 16.8% during the first two months of Q4 and outperformed the market by an even larger margin.

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