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After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Galapagos NV (NASDAQ:GLPG).
Is GLPG a good stock to buy now? The smart money was taking a bearish view. The number of long hedge fund positions went down by 2 recently. Galapagos NV (NASDAQ:GLPG) was in 11 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 22. Our calculations also showed that GLPG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 13 hedge funds in our database with GLPG holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are several metrics market participants employ to value publicly traded companies. A couple of the less known metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace their index-focused peers by a significant margin (see the details here).
Nathan Fischel of DAFNA Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind let's check out the key hedge fund action surrounding Galapagos NV (NASDAQ:GLPG).
Do Hedge Funds Think GLPG Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in GLPG a year ago. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies has the number one position in Galapagos NV (NASDAQ:GLPG), worth close to $25.5 million, amounting to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies's heels is Kris Jenner, Gordon Bussard, Graham McPhail of Rock Springs Capital Management, with a $24.8 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Bihua Chen's Cormorant Asset Management, Ken Griffin's Citadel Investment Group and Nathan Fischel's DAFNA Capital Management. In terms of the portfolio weights assigned to each position DAFNA Capital Management allocated the biggest weight to Galapagos NV (NASDAQ:GLPG), around 2.05% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, setting aside 0.71 percent of its 13F equity portfolio to GLPG.
Since Galapagos NV (NASDAQ:GLPG) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds who sold off their positions entirely by the end of the third quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the biggest investment of the 750 funds followed by Insider Monkey, worth close to $12.5 million in stock. Charles Clough's fund, Clough Capital Partners, also cut its stock, about $3.4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Galapagos NV (NASDAQ:GLPG). These stocks are Vistra Energy Corp. (NYSE:VST), Quidel Corporation (NASDAQ:QDEL), Bright Horizons Family Solutions Inc (NYSE:BFAM), Carnival Corporation & plc (NYSE:CUK), Chegg Inc (NYSE:CHGG), Fidelity National Financial Inc (NYSE:FNF), and Allegion plc (NYSE:ALLE). All of these stocks' market caps match GLPG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VST,45,1514450,3 QDEL,42,467265,10 BFAM,26,314357,-4 CUK,13,142847,-1 CHGG,42,838532,-3 FNF,44,1065923,-3 ALLE,32,540945,3 Average,34.9,697760,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.9 hedge funds with bullish positions and the average amount invested in these stocks was $698 million. That figure was $97 million in GLPG's case. Vistra Energy Corp. (NYSE:VST) is the most popular stock in this table. On the other hand Carnival Corporation & plc (NYSE:CUK) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Galapagos NV (NASDAQ:GLPG) is even less popular than CUK. Our overall hedge fund sentiment score for GLPG is 18. 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 GLPG. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th but managed to beat the market again by 16.2 percentage points. Unfortunately GLPG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); GLPG investors were disappointed as the stock returned -15.6% since the end of the third quarter (through 12/8) 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 most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.