Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Corning Incorporated (NYSE:GLW).
Corning Incorporated (NYSE:GLW) has experienced an increase in enthusiasm from smart money in recent months. Corning Incorporated (NYSE:GLW) was in 42 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GLW isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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’ 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 S&P 500 ETFs by 79 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 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.
Noam Gottesman of GLG Partners
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Do Hedge Funds Think GLW Is A Good Stock To Buy Now?
At Q2’s end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GLW over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Corning Incorporated (NYSE:GLW) was held by Arrowstreet Capital, which reported holding $209.1 million worth of stock at the end of June. It was followed by GLG Partners with a $55.1 million position. Other investors bullish on the company included Yacktman Asset Management, Millennium Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position Breakline Capital allocated the biggest weight to Corning Incorporated (NYSE:GLW), around 4.01% of its 13F portfolio. Valueworks LLC is also relatively very bullish on the stock, dishing out 2.53 percent of its 13F equity portfolio to GLW.
As industrywide interest jumped, key money managers have jumped into Corning Incorporated (NYSE:GLW) headfirst. Bridgewater Associates, managed by Ray Dalio, created the biggest position in Corning Incorporated (NYSE:GLW). Bridgewater Associates had $9.4 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $8.5 million position during the quarter. The following funds were also among the new GLW investors: Michael Gelband’s ExodusPoint Capital, Mika Toikka’s AlphaCrest Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s go over hedge fund activity in other stocks similar to Corning Incorporated (NYSE:GLW). These stocks are Welltower Inc. (NYSE:WELL), Nutrien Ltd. (NYSE:NTR), KKR & Co Inc. (NYSE:KKR), LyondellBasell Industries NV (NYSE:LYB), Yum! Brands, Inc. (NYSE:YUM), Archer Daniels Midland Company (NYSE:ADM), and Hilton Worldwide Holdings Inc (NYSE:HLT). This group of stocks’ market caps are similar to GLW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WELL | 19 | 427197 | -2 |
| NTR | 28 | 596869 | -5 |
| KKR | 54 | 5347811 | -2 |
| LYB | 41 | 888236 | -6 |
| YUM | 35 | 652331 | 3 |
| ADM | 41 | 837799 | 7 |
| HLT | 45 | 4558478 | -2 |
| Average | 37.6 | 1901246 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $1901 million. That figure was $522 million in GLW’s case. KKR & Co Inc. (NYSE:KKR) is the most popular stock in this table. On the other hand Welltower Inc. (NYSE:WELL) is the least popular one with only 19 bullish hedge fund positions. Corning Incorporated (NYSE:GLW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GLW is 72.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately GLW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GLW were disappointed as the stock returned -9% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
