Is GSK Stock A Buy or Sell?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not GlaxoSmithKline plc (NYSE:GSK) makes for a good investment right now.

Is GSK stock a buy? The smart money was getting less bullish. The number of bullish hedge fund positions shrunk by 1 recently. GlaxoSmithKline plc (NYSE:GSK) was in 30 hedge funds’ portfolios at the end of December. The all time high for this statistic is 35. Our calculations also showed that GSK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 31 hedge funds in our database with GSK positions at the end of the third quarter.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a look at the new hedge fund action regarding GlaxoSmithKline plc (NYSE:GSK).

Do Hedge Funds Think GSK Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in GSK a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

The largest stake in GlaxoSmithKline plc (NYSE:GSK) was held by Fisher Asset Management, which reported holding $608.2 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $525.2 million position. Other investors bullish on the company included Arrowstreet Capital, Camber Capital Management, and Kahn Brothers. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to GlaxoSmithKline plc (NYSE:GSK), around 12.4% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, earmarking 8.23 percent of its 13F equity portfolio to GSK.

Due to the fact that GlaxoSmithKline plc (NYSE:GSK) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their entire stakes in the fourth quarter. Intriguingly, Michael Castor’s Sio Capital cut the largest position of all the hedgies monitored by Insider Monkey, valued at about $7.8 million in stock, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners was right behind this move, as the fund cut about $0.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds in the fourth quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as GlaxoSmithKline plc (NYSE:GSK) but similarly valued. We will take a look at Stryker Corporation (NYSE:SYK), Booking Holdings Inc. (NASDAQ:BKNG), Goldman Sachs Group, Inc. (NYSE:GS), Uber Technologies, Inc. (NYSE:UBER), CVS Health Corporation (NYSE:CVS), Target Corporation (NYSE:TGT), and Fidelity National Information Services Inc. (NYSE:FIS). This group of stocks’ market valuations resemble GSK’s market valuation.

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As you can see these stocks had an average of 83.6 hedge funds with bullish positions and the average amount invested in these stocks was $5769 million. That figure was $1742 million in GSK’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand Stryker Corporation (NYSE:SYK) is the least popular one with only 44 bullish hedge fund positions. Compared to these stocks GlaxoSmithKline plc (NYSE:GSK) is even less popular than SYK. Our overall hedge fund sentiment score for GSK is 29.7. 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. Hedge funds dodged a bullet by taking a bearish stance towards GSK. Our calculations showed that the top 20 most popular hedge fund stocks returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th but managed to beat the market again by 1.5 percentage points. Unfortunately GSK wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was very bearish); GSK investors were disappointed as the stock returned -0.3% since the end of the fourth quarter (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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