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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 900 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 Globus Medical Inc (NYSE:GMED) in this article.
Globus Medical Inc (NYSE:GMED) was in 35 hedge funds' portfolios at the end of June. The all time high for this statistic was previously 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. GMED shareholders have witnessed an increase in hedge fund interest lately. There were 28 hedge funds in our database with GMED positions at the end of the first quarter. Our calculations also showed that GMED isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the 21st century investor’s toolkit there are tons of tools stock traders have at their disposal to value their stock investments. A pair of the best tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can outclass the S&P 500 by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Ray Dalio of Bridgewater Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV 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. Now let's take a look at the recent hedge fund action encompassing Globus Medical Inc (NYSE:GMED).
Do Hedge Funds Think GMED Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 32 hedge funds with a bullish position in GMED a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Consonance Capital Management held the most valuable stake in Globus Medical Inc (NYSE:GMED), which was worth $84.1 million at the end of the second quarter. On the second spot was Polar Capital which amassed $59.8 million worth of shares. Integral Health Asset Management, Two Sigma Advisors, and Balyasny Asset 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 Consonance Capital Management allocated the biggest weight to Globus Medical Inc (NYSE:GMED), around 10.12% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, designating 2.91 percent of its 13F equity portfolio to GMED.
As one would reasonably expect, key hedge funds were leading the bulls' herd. Bridgewater Associates, managed by Ray Dalio, assembled the biggest position in Globus Medical Inc (NYSE:GMED). Bridgewater Associates had $7.7 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $3.9 million position during the quarter. The other funds with new positions in the stock are Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, Greg Eisner's Engineers Gate Manager, and Jinghua Yan's TwinBeech Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Globus Medical Inc (NYSE:GMED) but similarly valued. These stocks are Encompass Health Corporation (NYSE:EHC), Brunswick Corporation (NYSE:BC), AngloGold Ashanti Limited (NYSE:AU), Reinsurance Group of America Inc (NYSE:RGA), Skechers USA Inc (NYSE:SKX), Tempur Sealy International Inc. (NYSE:TPX), and Anaplan, Inc. (NYSE:PLAN). This group of stocks' market values are similar to GMED's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EHC,42,864585,6 BC,38,1095771,-4 AU,12,372898,-2 RGA,28,414971,1 SKX,35,772836,6 TPX,35,1096506,-2 PLAN,52,2141802,-3 Average,34.6,965624,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $966 million. That figure was $309 million in GMED's case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 12 bullish hedge fund positions. Globus Medical Inc (NYSE:GMED) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GMED is 68.8. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately GMED wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GMED were disappointed as the stock returned -2.6% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.