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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 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 Gossamer Bio, Inc. (NASDAQ:GOSS) in this article.
Is GOSS a good stock to buy now? Gossamer Bio, Inc. (NASDAQ:GOSS) shareholders have witnessed an increase in support from the world's most elite money managers of late. Gossamer Bio, Inc. (NASDAQ:GOSS) was in 21 hedge funds' portfolios at the end of September. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GOSS 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.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Oleg Nodelman of EcoR1 Capital
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. Keeping this in mind we're going to go over the fresh hedge fund action surrounding Gossamer Bio, Inc. (NASDAQ:GOSS).
Do Hedge Funds Think GOSS Is A Good Stock To Buy Now?
At the end of September, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in GOSS a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Gossamer Bio, Inc. (NASDAQ:GOSS) was held by Hillhouse Capital Management, which reported holding $92.1 million worth of stock at the end of September. It was followed by EcoR1 Capital with a $31 million position. Other investors bullish on the company included Alyeska Investment Group, Palo Alto Investors, and Masters Capital Management. In terms of the portfolio weights assigned to each position EcoR1 Capital allocated the biggest weight to Gossamer Bio, Inc. (NASDAQ:GOSS), around 2.21% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, dishing out 0.76 percent of its 13F equity portfolio to GOSS.
As one would reasonably expect, key hedge funds have jumped into Gossamer Bio, Inc. (NASDAQ:GOSS) headfirst. EcoR1 Capital, managed by Oleg Nodelman, assembled the biggest position in Gossamer Bio, Inc. (NASDAQ:GOSS). EcoR1 Capital had $31 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley's Polar Capital also made a $1 million investment in the stock during the quarter. The other funds with brand new GOSS positions are Paul Marshall and Ian Wace's Marshall Wace LLP, Mika Toikka's AlphaCrest Capital Management, and Paul Tudor Jones's Tudor Investment Corp.
Let's now take a look at hedge fund activity in other stocks similar to Gossamer Bio, Inc. (NASDAQ:GOSS). These stocks are QAD Inc. (NASDAQ:QADB), Celestica Inc. (NYSE:CLS), Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), istar Inc (NYSE:STAR), Employers Holdings, Inc. (NYSE:EIG), DHT Holdings Inc (NYSE:DHT), and Cardtronics plc (NASDAQ:CATM). This group of stocks' market valuations are closest to GOSS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QADB,1,752,0 CLS,15,87990,4 AMPH,8,16840,-1 STAR,14,102800,1 EIG,12,52197,0 DHT,24,129282,6 CATM,15,247410,-6 Average,12.7,91039,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $197 million in GOSS's case. DHT Holdings Inc (NYSE:DHT) is the most popular stock in this table. On the other hand QAD Inc. (NASDAQ:QADB) is the least popular one with only 1 bullish hedge fund positions. Gossamer Bio, Inc. (NASDAQ:GOSS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GOSS is 80.5. 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. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately GOSS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GOSS were disappointed as the stock returned -15% since the end of September (through 12/14) 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.
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Disclosure: None. This article was originally published at Insider Monkey.