Should You Buy Globus Medical Inc (GMED)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Globus Medical Inc (NYSE:GMED).

Globus Medical Inc has seen an increase in support from the world’s most elite money managers of late. GMED was in 23 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with GMED holdings at the end of the previous quarter. At the end of this article we will also compare GMED to other stocks including Terex Corporation (NYSE:TEX), Knight Transportation (NYSE:KNX), and The New York Times Company (NYSE:NYT) to get a better sense of its popularity.

Keeping this in mind, let’s take a peek at the recent action encompassing Globus Medical Inc (NYSE:GMED).

How have hedgies been trading Globus Medical Inc (NYSE:GMED)?

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Amy Minella’s Cardinal Capital has the number one position in Globus Medical Inc (NYSE:GMED), worth close to $15.5 million, comprising 1% of its total 13F portfolio. Sitting at the No. 2 spot is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $12.4 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish consist of Vishal Saluja and Pham Quang’s Endurant Capital Management, Robert B. Gillam’s McKinley Capital Management and James Dondero’s Highland Capital Management.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, initiated the most outsized position in Globus Medical Inc (NYSE:GMED). Renaissance Technologies had $3 million invested in the company at the end of the quarter. Justin John Ferayorni’s Tamarack Capital Management also initiated a $0.9 million position during the quarter. The other funds with new positions in the stock are Chao Ku’s Nine Chapters Capital Management, Hal Mintz’s Sabby Capital, and Benjamin A. Smith’s Laurion Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Globus Medical Inc (NYSE:GMED) but similarly valued. We will take a look at Terex Corporation (NYSE:TEX), Knight Transportation (NYSE:KNX), The New York Times Company (NYSE:NYT), and Xenia Hotels & Resorts Inc (NYSE:XHR). This group of stocks’ market valuations match GMED’s market valuation.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $85 million in GMED’s case. Terex Corporation (NYSE:TEX) is the most popular stock in this table. On the other hand Xenia Hotels & Resorts Inc (NYSE:XHR) is the least popular one with only 13 bullish hedge fund positions. Globus Medical Inc (NYSE:GMED) is among the most popular stocks in this group and that makes the stock worth a closer look.