“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards G1 Therapeutics, Inc. (NASDAQ:GTHX) and see how it was affected.
Is G1 Therapeutics, Inc. (NASDAQ:GTHX) the right investment to pursue these days? Money managers are getting less optimistic. The number of long hedge fund bets dropped by 9 lately. Our calculations also showed that GTHX isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s go over the latest hedge fund action encompassing G1 Therapeutics, Inc. (NASDAQ:GTHX).
What have hedge funds been doing with G1 Therapeutics, Inc. (NASDAQ:GTHX)?
Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -45% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GTHX over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Cormorant Asset Management, managed by Bihua Chen, holds the number one position in G1 Therapeutics, Inc. (NASDAQ:GTHX). Cormorant Asset Management has a $19 million position in the stock, comprising 1.5% of its 13F portfolio. The second largest stake is held by Paul Marshall and Ian Wace of Marshall Wace LLP, with a $7.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain Ken Griffin’s Citadel Investment Group, Julian Baker and Felix Baker’s Baker Bros. Advisors and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management.
Due to the fact that G1 Therapeutics, Inc. (NASDAQ:GTHX) has witnessed a decline in interest from hedge fund managers, we can see that there is a sect of funds that elected to cut their positions entirely in the third quarter. At the top of the heap, Lei Zhang’s Hillhouse Capital Management sold off the largest position of the 700 funds monitored by Insider Monkey, worth an estimated $49.6 million in stock, and James E. Flynn’s Deerfield Management was right behind this move, as the fund dropped about $15 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 9 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as G1 Therapeutics, Inc. (NASDAQ:GTHX) but similarly valued. These stocks are Patrick Industries, Inc. (NASDAQ:PATK), AK Steel Holding Corporation (NYSE:AKS), Central Pacific Financial Corp. (NYSE:CPF), and Fidelity Southern Corporation (NASDAQ:LION). All of these stocks’ market caps match GTHX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PATK | 24 | 62486 | 6 |
| AKS | 15 | 29356 | -5 |
| CPF | 14 | 65168 | 2 |
| LION | 9 | 57537 | 0 |
| Average | 15.5 | 53637 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $36 million in GTHX’s case. Patrick Industries, Inc. (NASDAQ:PATK) is the most popular stock in this table. On the other hand Fidelity Southern Corporation (NASDAQ:LION) is the least popular one with only 9 bullish hedge fund positions. G1 Therapeutics, Inc. (NASDAQ:GTHX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately GTHX wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); GTHX investors were disappointed as the stock returned -3.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
