At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Gridsum Holding Inc. (NASDAQ:GSUM) makes for a good investment right now.
Is Gridsum Holding Inc. (NASDAQ:GSUM) an exceptional stock to buy now? The smart money was in a bullish mood. The number of long hedge fund positions advanced by 1 lately. Gridsum Holding Inc. (NASDAQ:GSUM) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. Our calculations also showed that GSUM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 3 hedge funds in our database with GSUM holdings at the end of June.
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s go over the fresh hedge fund action surrounding Gridsum Holding Inc. (NASDAQ:GSUM).
What have hedge funds been doing with Gridsum Holding Inc. (NASDAQ:GSUM)?
At third quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GSUM over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Moon Capital, managed by John W. Moon, holds the largest position in Gridsum Holding Inc. (NASDAQ:GSUM). Moon Capital has a $3.6 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $1.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of Matthew Moskey and Friedrich Schulte-Hillen’s Athos Capital, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Moon Capital allocated the biggest weight to Gridsum Holding Inc. (NASDAQ:GSUM), around 1.24% of its 13F portfolio. Athos Capital is also relatively very bullish on the stock, dishing out 0.51 percent of its 13F equity portfolio to GSUM.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in Gridsum Holding Inc. (NASDAQ:GSUM). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks similar to Gridsum Holding Inc. (NASDAQ:GSUM). These stocks are Sensus Healthcare, Inc. (NASDAQ:SRTS), Mogo Inc. (NASDAQ:MOGO), Houston Wire & Cable Company (NASDAQ:HWCC), AutoWeb, Inc. (NASDAQ:AUTO), Friedman Industries (NYSE:FRD), Dawson Geophysical Company (NASDAQ:DWSN), and First US Bancshares, Inc. (NASDAQ:FUSB). This group of stocks’ market caps are closest to GSUM’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.3 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $6 million in GSUM’s case. Houston Wire & Cable Company (NASDAQ:HWCC) is the most popular stock in this table. On the other hand Friedman Industries (NYSE:FRD) is the least popular one with only 1 bullish hedge fund positions. Gridsum Holding Inc. (NASDAQ:GSUM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GSUM is 38.1. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on GSUM as the stock returned 43% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.