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 GW Pharmaceuticals plc (NASDAQ:GWPH).
GW Pharmaceuticals plc (NASDAQ:GWPH) shareholders have witnessed a decrease in hedge fund sentiment of late. Our calculations also showed that gwph isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a peek at the latest hedge fund action encompassing GW Pharmaceuticals plc (NASDAQ:GWPH).
Hedge fund activity in GW Pharmaceuticals plc (NASDAQ:GWPH)
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in GWPH a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Scopia Capital held the most valuable stake in GW Pharmaceuticals plc (NASDAQ:GWPH), which was worth $126.4 million at the end of the first quarter. On the second spot was Rock Springs Capital Management which amassed $118 million worth of shares. Moreover, Citadel Investment Group, Baker Bros. Advisors, and Polar Capital were also bullish on GW Pharmaceuticals plc (NASDAQ:GWPH), allocating a large percentage of their portfolios to this stock.
Due to the fact that GW Pharmaceuticals plc (NASDAQ:GWPH) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few money managers that decided to sell off their entire stakes last quarter. It's worth mentioning that James E. Flynn's Deerfield Management sold off the largest stake of all the hedgies watched by Insider Monkey, totaling about $10.6 million in call options. Matthew Hulsizer's fund, PEAK6 Capital Management, also dropped its call options, about $2.9 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as GW Pharmaceuticals plc (NASDAQ:GWPH) but similarly valued. We will take a look at Polaris Industries Inc. (NYSE:PII), Fluor Corporation (NYSE:FLR), Teradata Corporation (NYSE:TDC), and United Therapeutics Corporation (NASDAQ:UTHR). All of these stocks' market caps are similar to GWPH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PII,16,89139,1 FLR,22,311072,2 TDC,20,294027,-1 UTHR,21,1050522,-2 Average,19.75,436190,0 [/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 $436 million. That figure was $540 million in GWPH's case. Fluor Corporation (NYSE:FLR) is the most popular stock in this table. On the other hand Polaris Industries Inc. (NYSE:PII) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks GW Pharmaceuticals plc (NASDAQ:GWPH) is more popular among hedge funds. 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 GWPH as the stock returned 4.7% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.