Hedge Funds Are Selling Corning Incorporated (GLW)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Corning Incorporated (NYSE:GLW) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Corning Incorporated (NYSE:GLW) shareholders have witnessed a decrease in hedge fund sentiment recently. Corning Incorporated (NYSE:GLW) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistics is 41. Our calculations also showed that GLW isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Donald Yacktman of Yacktman Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a glance at the new hedge fund action surrounding Corning Incorporated (NYSE:GLW).

What have hedge funds been doing with Corning Incorporated (NYSE:GLW)?

At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the first quarter of 2020. By comparison, 26 hedge funds held shares or bullish call options in GLW a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of Corning Incorporated (NYSE:GLW), with a stake worth $30.8 million reported as of the end of September. Trailing Citadel Investment Group was Yacktman Asset Management, which amassed a stake valued at $30.8 million. Fairpointe Capital, Adage Capital Management, and Levin Easterly Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Valueworks LLC allocated the biggest weight to Corning Incorporated (NYSE:GLW), around 3.49% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, earmarking 3.18 percent of its 13F equity portfolio to GLW.

Seeing as Corning Incorporated (NYSE:GLW) has faced bearish sentiment from hedge fund managers, logic holds that there were a few money managers that slashed their positions entirely by the end of the second quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group cut the biggest stake of the 750 funds tracked by Insider Monkey, valued at about $25.8 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund sold off about $4.6 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds by the end of the second quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Corning Incorporated (NYSE:GLW) but similarly valued. We will take a look at TD Ameritrade Holding Corp. (NASDAQ:AMTD), Deutsche Bank Aktiengesellschaft (NYSE:DB), Nasdaq, Inc. (NASDAQ:NDAQ), Copart, Inc. (NASDAQ:CPRT), Banco Santander (Brasil) SA (NYSE:BSBR), Mettler-Toledo International Inc. (NYSE:MTD), and Carrier Global Corporation (NYSE:CARR). This group of stocks’ market valuations match GLW’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $792 million. That figure was $148 million in GLW’s case. Copart, Inc. (NASDAQ:CPRT) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 10 bullish hedge fund positions. Corning Incorporated (NYSE:GLW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GLW is 41.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. A small number of hedge funds were also right about betting on GLW as the stock returned 21.3% since the end of June (through September 25th) and outperformed the market by an even larger margin.

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