Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 30 stock picks outperformed the S&P 500 Index by 4 percentage points through the middle of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
GlaxoSmithKline plc (NYSE:GSK) was in 24 hedge funds’ portfolios at the end of September. GSK has experienced an increase in hedge fund interest of late. There were 21 hedge funds in our database with GSK positions at the end of the previous quarter. Our calculations also showed that GSK isn’t among the 30 most popular stocks among hedge funds.
Today there are a lot of tools shareholders have at their disposal to grade their stock investments. A duo of the best tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can beat the market by a solid amount (see the details here).
We’re going to check out the new hedge fund action regarding GlaxoSmithKline plc (NYSE:GSK).
How are hedge funds trading GlaxoSmithKline plc (NYSE:GSK)?
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in GSK over the last 13 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, Fisher Asset Management was the largest shareholder of GlaxoSmithKline plc (NYSE:GSK), with a stake worth $562.8 million reported as of the end of September. Trailing Fisher Asset Management was Renaissance Technologies, which amassed a stake valued at $407.1 million. Arrowstreet Capital, Ariel Investments, and Kahn Brothers were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Sio Capital, managed by Michael Castor, initiated the most valuable position in GlaxoSmithKline plc (NYSE:GSK). Sio Capital had $14.6 million invested in the company at the end of the quarter. Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management also initiated a $0.3 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to GlaxoSmithKline plc (NYSE:GSK). We will take a look at Lockheed Martin Corporation (NYSE:LMT), Thermo Fisher Scientific Inc. (NYSE:TMO), General Electric Company (NYSE:GE), and Booking Holdings Inc. (NASDAQ:BKNG). This group of stocks’ market valuations match GSK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LMT | 36 | 2016945 | 3 |
| TMO | 56 | 4602612 | -3 |
| GE | 46 | 4540328 | 2 |
| BKNG | 68 | 6498246 | -2 |
| Average | 51.5 | 4414533 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.5 hedge funds with bullish positions and the average amount invested in these stocks was $4.42 billion. That figure was $1.45 billion in GSK’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand Lockheed Martin Corporation (NYSE:LMT) is the least popular one with only 36 bullish hedge fund positions. Compared to these stocks GlaxoSmithKline plc (NYSE:GSK) is even less popular than LMT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.
