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We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Guardant Health, Inc. (NASDAQ:GH) based on that data.
Is Guardant Health, Inc. (NASDAQ:GH) a healthy stock for your portfolio? Investors who are in the know are taking a pessimistic view. The number of long hedge fund bets were cut by 2 in recent months. Our calculations also showed that GH isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). GH was in 27 hedge funds' portfolios at the end of the first quarter of 2020. There were 29 hedge funds in our database with GH positions at the end of the previous quarter.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
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Philippe Laffont of Coatue Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to go over the latest hedge fund action surrounding Guardant Health, Inc. (NASDAQ:GH).
What have hedge funds been doing with Guardant Health, Inc. (NASDAQ:GH)?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. By comparison, 14 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.
The largest stake in Guardant Health, Inc. (NASDAQ:GH) was held by Viking Global, which reported holding $264.4 million worth of stock at the end of September. It was followed by Coatue Management with a $159.5 million position. Other investors bullish on the company included Marshall Wace LLP, Rock Springs Capital Management, and Rhenman & Partners Asset Management. In terms of the portfolio weights assigned to each position Coatue Management allocated the biggest weight to Guardant Health, Inc. (NASDAQ:GH), around 2.02% of its 13F portfolio. Islet Management is also relatively very bullish on the stock, dishing out 1.73 percent of its 13F equity portfolio to GH.
Seeing as Guardant Health, Inc. (NASDAQ:GH) has faced declining sentiment from hedge fund managers, it's easy to see that there were a few hedgies who were dropping their positions entirely heading into Q4. At the top of the heap, Jeremy Green's Redmile Group dumped the largest position of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $30.5 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund cut about $26.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Guardant Health, Inc. (NASDAQ:GH) but similarly valued. We will take a look at Guidewire Software Inc (NYSE:GWRE), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Perrigo Company (NASDAQ:PRGO), and ABIOMED, Inc. (NASDAQ:ABMD). This group of stocks' market values are similar to GH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GWRE,34,756960,2 ACAD,28,2404189,-6 PRGO,28,463596,1 ABMD,27,522802,-8 Average,29.25,1036887,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $1037 million. That figure was $549 million in GH's case. Guidewire Software Inc (NYSE:GWRE) is the most popular stock in this table. On the other hand ABIOMED, Inc. (NASDAQ:ABMD) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Guardant Health, Inc. (NASDAQ:GH) is even less popular than ABMD. Hedge funds clearly dropped the ball on GH as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on GH as the stock returned 29.9% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.