Were Hedge Funds Right About Globant SA (GLOB)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Globant SA (NYSE:GLOB) in this article.

Globant SA (NYSE:GLOB) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 21. GLOB investors should pay attention to an increase in enthusiasm from smart money recently. There were 15 hedge funds in our database with GLOB positions at the end of the fourth quarter. Our calculations also showed that GLOB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Richard Driehaus of Driehaus Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. With all of this in mind we’re going to view the latest hedge fund action encompassing Globant SA (NYSE:GLOB).

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

At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in GLOB a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Among these funds, Fisher Asset Management held the most valuable stake in Globant SA (NYSE:GLOB), which was worth $230.4 million at the end of the fourth quarter. On the second spot was Cartica Management which amassed $30.1 million worth of shares. Driehaus Capital, GLG Partners, and Millennium 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 Cartica Management allocated the biggest weight to Globant SA (NYSE:GLOB), around 8.07% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, designating 0.25 percent of its 13F equity portfolio to GLOB.

As industrywide interest jumped, some big names were leading the bulls’ herd. Cartica Management, managed by Teresa Barger, established the most valuable position in Globant SA (NYSE:GLOB). Cartica Management had $30.1 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Qing Li’s Sciencast Management.

Let’s also examine hedge fund activity in other stocks similar to Globant SA (NYSE:GLOB). We will take a look at Acceleron Pharma Inc (NASDAQ:XLRN), Beyond Meat, Inc. (NASDAQ:BYND), Polaris Inc. (NYSE:PII), Ares Capital Corporation (NASDAQ:ARCC), CyrusOne Inc (NASDAQ:CONE), AerCap Holdings N.V. (NYSE:AER), and First Citizens BancShares Inc. (NASDAQ:FCNCA). This group of stocks’ market values match GLOB’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.7 hedge funds with bullish positions and the average amount invested in these stocks was $723 million. That figure was $323 million in GLOB’s case. AerCap Holdings N.V. (NYSE:AER) is the most popular stock in this table. On the other hand Ares Capital Corporation (NASDAQ:ARCC) is the least popular one with only 15 bullish hedge fund positions. Globant SA (NYSE:GLOB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GLOB is 34.9. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on GLOB, though not to the same extent, as the stock returned 14.5% since the end of Q1 (through July 23rd) and outperformed the market.

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