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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Guardant Health, Inc. (NASDAQ:GH) based on that data.
Is GH stock a buy or sell? Guardant Health, Inc. (NASDAQ:GH) was in 52 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. GH investors should be aware of an increase in support from the world's most elite money managers of late. There were 41 hedge funds in our database with GH positions at the end of the third quarter. Our calculations also showed that GH isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 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.
Ian Wace of Marshall Wace
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage (or at the end of this article). Keeping this in mind let's check out the recent hedge fund action regarding Guardant Health, Inc. (NASDAQ:GH).
Do Hedge Funds Think GH Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the third quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in GH a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Andreas Halvorsen's Viking Global has the biggest position in Guardant Health, Inc. (NASDAQ:GH), worth close to $455.6 million, corresponding to 1.3% of its total 13F portfolio. On Viking Global's heels is Coatue Management, managed by Philippe Laffont, which holds a $144.2 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Paul Marshall and Ian Wace's Marshall Wace LLP, Aaron Cowen's Suvretta Capital Management and Arthur B Cohen and Joseph Healey's Healthcor Management LP. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to Guardant Health, Inc. (NASDAQ:GH), around 2.77% of its 13F portfolio. Healthcor Management LP is also relatively very bullish on the stock, earmarking 2.7 percent of its 13F equity portfolio to GH.
As aggregate interest increased, some big names have been driving this bullishness. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, established the most valuable position in Guardant Health, Inc. (NASDAQ:GH). Senator Investment Group had $64.4 million invested in the company at the end of the quarter. Christopher James's Partner Fund Management also initiated a $29.4 million position during the quarter. The other funds with new positions in the stock are Ricky Sandler's Eminence Capital, Glen Kacher's Light Street Capital, and Renaissance Technologies.
Let's now take a look at hedge fund activity in other stocks similar to Guardant Health, Inc. (NASDAQ:GH). We will take a look at Alliant Energy Corporation (NASDAQ:LNT), Erie Indemnity Company (NASDAQ:ERIE), Hasbro, Inc. (NASDAQ:HAS), Elastic N.V. (NYSE:ESTC), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), United Airlines Holdings Inc (NASDAQ:UAL), and Franklin Resources, Inc. (NYSE:BEN). This group of stocks' market valuations are closest to GH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LNT,29,276325,-1 ERIE,7,44866,-7 HAS,36,356289,5 ESTC,49,2229419,13 CHRW,29,622398,7 UAL,52,1096410,12 BEN,33,268664,0 Average,33.6,699196,4.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.6 hedge funds with bullish positions and the average amount invested in these stocks was $699 million. That figure was $1538 million in GH's case. United Airlines Holdings Inc (NASDAQ:UAL) is the most popular stock in this table. On the other hand Erie Indemnity Company (NASDAQ:ERIE) is the least popular one with only 7 bullish hedge fund positions. Guardant Health, Inc. (NASDAQ:GH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GH is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on GH as the stock returned 12.9% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.