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Is GLW A Good Stock To Buy According To Hedge Funds?

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Asma UL Husna
·6 min read
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In this article you are going to find out whether hedge funds think Corning Incorporated (NYSE:GLW) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is GLW a good stock to buy? Corning Incorporated (NYSE:GLW) was in 36 hedge funds' portfolios at the end of September. The all time high for this statistic is 41. GLW investors should be aware of an increase in support from the world's most elite money managers of late. There were 28 hedge funds in our database with GLW holdings at the end of June. Our calculations also showed that GLW 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Yacktman of Yacktman Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Now let's check out the key hedge fund action encompassing Corning Incorporated (NYSE:GLW).

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

At Q3's end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in GLW a year ago. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, Maverick Capital held the most valuable stake in Corning Incorporated (NYSE:GLW), which was worth $133.9 million at the end of the third quarter. On the second spot was Yacktman Asset Management which amassed $38.5 million worth of shares. Masters Capital Management, Citadel Investment Group, 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 Valueworks LLC allocated the biggest weight to Corning Incorporated (NYSE:GLW), around 4.01% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, earmarking 3.57 percent of its 13F equity portfolio to GLW.

As aggregate interest increased, key money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, established the biggest position in Corning Incorporated (NYSE:GLW). Citadel Investment Group had $14.1 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also initiated a $11.5 million position during the quarter. The following funds were also among the new GLW investors: Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, Greg Eisner's Engineers Gate Manager, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Corning Incorporated (NYSE:GLW) but similarly valued. These stocks are Copart, Inc. (NASDAQ:CPRT), RingCentral Inc (NYSE:RNG), Credit Suisse Group AG (NYSE:CS), Skyworks Solutions Inc (NASDAQ:SWKS), China Telecom Corporation Limited (NYSE:CHA), The Trade Desk, Inc. (NASDAQ:TTD), and McKesson Corporation (NYSE:MCK). All of these stocks' market caps match GLW's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CPRT,56,1077546,-4 RNG,59,3300948,-3 CS,13,68386,-1 SWKS,50,886176,1 CHA,3,30054,-2 TTD,23,510796,3 MCK,54,1770079,-7 Average,36.9,1091998,-1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $1092 million. That figure was $347 million in GLW's case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand China Telecom Corporation Limited (NYSE:CHA) is the least popular one with only 3 bullish hedge fund positions. Corning Incorporated (NYSE:GLW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GLW is 65.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on GLW as the stock returned 12.5% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.

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

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