It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Total Return Index ETFs returned approximately 27.5% in 2019 (through the end of November). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 37.4% during the same 11-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like GlycoMimetics, Inc. (NASDAQ:GLYC).
GlycoMimetics, Inc. (NASDAQ:GLYC) was in 7 hedge funds’ portfolios at the end of September. GLYC shareholders have witnessed a decrease in hedge fund sentiment recently. There were 9 hedge funds in our database with GLYC positions at the end of the previous quarter. Our calculations also showed that GLYC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Let’s view the latest hedge fund action encompassing GlycoMimetics, Inc. (NASDAQ:GLYC).
How have hedgies been trading GlycoMimetics, Inc. (NASDAQ:GLYC)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in GLYC over the last 17 quarters. So, let’s see 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, Mark Lampert’s Biotechnology Value Fund has the biggest position in GlycoMimetics, Inc. (NASDAQ:GLYC), worth close to $31.7 million, corresponding to 3.3% of its total 13F portfolio. On Biotechnology Value Fund’s heels is Camber Capital Management, led by Stephen DuBois, holding a $15.1 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Jeremy Green’s Redmile Group, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Biotechnology Value Fund allocated the biggest weight to GlycoMimetics, Inc. (NASDAQ:GLYC), around 3.33% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, setting aside 0.79 percent of its 13F equity portfolio to GLYC.
Seeing as GlycoMimetics, Inc. (NASDAQ:GLYC) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there were a few funds that slashed their positions entirely in the third quarter. Intriguingly, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management dumped the largest stake of all the hedgies followed by Insider Monkey, comprising about $6.6 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund cut about $5.9 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to GlycoMimetics, Inc. (NASDAQ:GLYC). These stocks are Phoenix New Media Ltd (NYSE:FENG), Elevate Credit, Inc. (NYSE:ELVT), Calyxt, Inc. (NASDAQ:CLXT), and Bel Fuse, Inc. (NASDAQ:BELFB). This group of stocks’ market caps resemble GLYC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FENG | 7 | 18685 | -2 |
| ELVT | 11 | 20789 | 1 |
| CLXT | 5 | 3076 | 2 |
| BELFB | 7 | 18883 | 0 |
| Average | 7.5 | 15358 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $59 million in GLYC’s case. Elevate Credit, Inc. (NYSE:ELVT) is the most popular stock in this table. On the other hand Calyxt, Inc. (NASDAQ:CLXT) is the least popular one with only 5 bullish hedge fund positions. GlycoMimetics, Inc. (NASDAQ:GLYC) 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 GLYC as the stock returned 36.4% 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.
