Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Global Cord Blood Corp (NYSE:CO) changed recently.
Is Global Cord Blood Corp (NYSE:CO) going to take off soon? Hedge funds are taking an optimistic view. The number of long hedge fund positions inched up by 1 lately. Our calculations also showed that CO isn’t among the 30 most popular stocks among hedge funds (see the video below). CO was in 9 hedge funds’ portfolios at the end of June. There were 8 hedge funds in our database with CO holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the key hedge fund action surrounding Global Cord Blood Corp (NYSE:CO).
How have hedgies been trading Global Cord Blood Corp (NYSE:CO)?
Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CO over the last 16 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Global Cord Blood Corp (NYSE:CO), with a stake worth $16.3 million reported as of the end of March. Trailing Renaissance Technologies was Rock Springs Capital Management, which amassed a stake valued at $5.3 million. GLG Partners, Oasis Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, specific money managers have jumped into Global Cord Blood Corp (NYSE:CO) headfirst. Oasis Management, managed by Seth Fischer, created the biggest position in Global Cord Blood Corp (NYSE:CO). Oasis Management had $1.2 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks similar to Global Cord Blood Corp (NYSE:CO). We will take a look at Ameresco Inc (NYSE:AMRC), Astec Industries, Inc. (NASDAQ:ASTE), nLIGHT, Inc. (NASDAQ:LASR), and Sabine Royalty Trust (NYSE:SBR). This group of stocks’ market values are closest to CO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMRC | 5 | 28062 | -5 |
| ASTE | 11 | 93407 | 0 |
| LASR | 5 | 51538 | 0 |
| SBR | 7 | 26451 | 1 |
| Average | 7 | 49865 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $29 million in CO’s case. Astec Industries, Inc. (NASDAQ:ASTE) is the most popular stock in this table. On the other hand Ameresco Inc (NYSE:AMRC) is the least popular one with only 5 bullish hedge fund positions. Global Cord Blood Corp (NYSE:CO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CO were disappointed as the stock returned -16.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
