In this article you are going to find out whether hedge funds think Glu Mobile Inc. (NASDAQ:GLUU) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Glu Mobile Inc. (NASDAQ:GLUU) has seen a decrease in hedge fund interest of late. Our calculations also showed that GLUU isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Philippe Laffont of Coatue Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to analyze the new hedge fund action encompassing Glu Mobile Inc. (NASDAQ:GLUU).
How are hedge funds trading Glu Mobile Inc. (NASDAQ:GLUU)?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in GLUU over the last 18 quarters. 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, Coatue Management was the largest shareholder of Glu Mobile Inc. (NASDAQ:GLUU), with a stake worth $27.5 million reported as of the end of September. Trailing Coatue Management was Greenhouse Funds, which amassed a stake valued at $21.2 million. Citadel Investment Group, Arrowstreet Capital, and Portolan Capital Management 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 Greenhouse Funds allocated the biggest weight to Glu Mobile Inc. (NASDAQ:GLUU), around 5.16% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, setting aside 1.51 percent of its 13F equity portfolio to GLUU.
Since Glu Mobile Inc. (NASDAQ:GLUU) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedgies that decided to sell off their entire stakes heading into Q4. Intriguingly, Israel Englander’s Millennium Management dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, totaling close to $15.4 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $4.8 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Glu Mobile Inc. (NASDAQ:GLUU). We will take a look at Cardtronics plc (NASDAQ:CATM), Murphy Oil Corporation (NYSE:MUR), Aimmune Therapeutics Inc (NASDAQ:AIMT), and NuStar Energy L.P. (NYSE:NS). This group of stocks’ market caps are similar to GLUU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CATM | 17 | 246532 | -5 |
| MUR | 20 | 46262 | -4 |
| AIMT | 18 | 138411 | 5 |
| NS | 4 | 8087 | -3 |
| Average | 14.75 | 109823 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $114 million in GLUU’s case. Murphy Oil Corporation (NYSE:MUR) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 4 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. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on GLUU as the stock returned 47.3% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
