U.S. Markets open in 6 hrs 12 mins

Is Global Blood Therapeutics Inc (GBT) A Good Stock To Buy?

Nina Todic

Before we spend countless hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Global Blood Therapeutics Inc (NASDAQ:GBT).

Global Blood Therapeutics Inc (NASDAQ:GBT) investors should be aware of an increase in hedge fund interest in recent months. GBT was in 26 hedge funds' portfolios at the end of March. There were 25 hedge funds in our database with GBT positions at the end of the previous quarter. Our calculations also showed that gbt isn't among the 30 most popular stocks among hedge funds.

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 market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

FARALLON CAPITAL

Let's take a peek at the latest hedge fund action surrounding Global Blood Therapeutics Inc (NASDAQ:GBT).

Hedge fund activity in Global Blood Therapeutics Inc (NASDAQ:GBT)

At Q1's end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in GBT over the last 15 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with GBT Positions

When looking at the institutional investors followed by Insider Monkey, Perceptive Advisors, managed by Joseph Edelman, holds the number one position in Global Blood Therapeutics Inc (NASDAQ:GBT). Perceptive Advisors has a $292.5 million position in the stock, comprising 8.3% of its 13F portfolio. The second most bullish fund manager is Camber Capital Management, managed by Stephen DuBois, which holds a $95.3 million position; the fund has 4.7% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Thomas Steyer's Farallon Capital, Jeffrey Jay and David Kroin's Great Point Partners and Behzad Aghazadeh's venBio Select Advisor.

As one would reasonably expect, key hedge funds have jumped into Global Blood Therapeutics Inc (NASDAQ:GBT) headfirst. Brookside Capital, managed by Bain Capital, established the most outsized position in Global Blood Therapeutics Inc (NASDAQ:GBT). Brookside Capital had $9.3 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also made a $2.1 million investment in the stock during the quarter. The other funds with brand new GBT positions are Gavin Saitowitz and Cisco J. del Valle's Springbok Capital, Philip Hempleman's Ardsley Partners, and Michael S. Weiss and Lindsay A. Rosenwald's Opus Point Partners Management.

Let's also examine hedge fund activity in other stocks similar to Global Blood Therapeutics Inc (NASDAQ:GBT). We will take a look at Cedar Fair, L.P. (NYSE:FUN), Exponent, Inc. (NASDAQ:EXPO), CommVault Systems, Inc. (NASDAQ:CVLT), and Tenet Healthcare Corp (NYSE:THC). All of these stocks' market caps match GBT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FUN,8,56848,-2 EXPO,18,111457,2 CVLT,29,390000,6 THC,24,916260,-11 Average,19.75,368641,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $369 million. That figure was $730 million in GBT's case. CommVault Systems, Inc. (NASDAQ:CVLT) is the most popular stock in this table. On the other hand Cedar Fair, L.P. (NYSE:FUN) is the least popular one with only 8 bullish hedge fund positions. Global Blood Therapeutics Inc (NASDAQ:GBT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on GBT as the stock returned 17.3% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

Related Content