At Insider Monkey, we pore over the filings of more than 700 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 Glu Mobile Inc. (NASDAQ:GLUU) makes for a good investment right now.
Is Glu Mobile Inc. (NASDAQ:GLUU) a healthy stock for your portfolio? Money managers are turning bullish. The number of bullish hedge fund positions advanced by 2 lately. Our calculations also showed that GLUU isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a peek at the key hedge fund action regarding Glu Mobile Inc. (NASDAQ:GLUU).
What does the smart money think about Glu Mobile Inc. (NASDAQ:GLUU)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GLUU over the last 13 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Glu Mobile Inc. (NASDAQ:GLUU), which was worth $32.8 million at the end of the third quarter. On the second spot was D E Shaw which amassed $18 million worth of shares. Moreover, Millennium Management, Columbus Circle Investors, and Tourbillon Capital Partners were also bullish on Glu Mobile Inc. (NASDAQ:GLUU), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key money managers have jumped into Glu Mobile Inc. (NASDAQ:GLUU) headfirst. HBK Investments, managed by David Costen Haley, assembled the largest position in Glu Mobile Inc. (NASDAQ:GLUU). HBK Investments had $2 million invested in the company at the end of the quarter. Josh Goldberg’s G2 Investment Partners Management also made a $0.7 million investment in the stock during the quarter. The other funds with brand new GLUU positions are Joel Greenblatt’s Gotham Asset Management, Richard Driehaus’s Driehaus Capital, and Mike Vranos’s Ellington.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Glu Mobile Inc. (NASDAQ:GLUU) but similarly valued. We will take a look at KEMET Corporation (NYSE:KEM), Trueblue Inc (NYSE:TBI), Viking Therapeutics, Inc. (NASDAQ:VKTX), and CareDx, Inc. (NASDAQ:CDNA). This group of stocks’ market valuations are closest to GLUU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KEM | 20 | 129835 | 1 |
| TBI | 14 | 67922 | -2 |
| VKTX | 27 | 133239 | 9 |
| CDNA | 19 | 118417 | 4 |
| Average | 20 | 112353 | 3 |
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 $112 million. That figure was $116 million in GLUU’s case. Viking Therapeutics, Inc. (NASDAQ:VKTX) is the most popular stock in this table. On the other hand Trueblue Inc (NYSE:TBI) is the least popular one with only 14 bullish hedge fund positions. Glu Mobile Inc. (NASDAQ:GLUU) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard VKTX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
