The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Glaukos Corporation (NYSE:GKOS).
Glaukos Corporation (NYSE:GKOS) has experienced a decrease in hedge fund sentiment lately. GKOS was in 15 hedge funds' portfolios at the end of March. There were 16 hedge funds in our database with GKOS holdings at the end of the previous quarter. Our calculations also showed that GKOS 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_364894" align="aligncenter" width="400"] James E. Flynn of Deerfield Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's check out the recent hedge fund action surrounding Glaukos Corporation (NYSE:GKOS).
What does smart money think about Glaukos Corporation (NYSE:GKOS)?
Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GKOS over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, OrbiMed Advisors was the largest shareholder of Glaukos Corporation (NYSE:GKOS), with a stake worth $47.8 million reported as of the end of September. Trailing OrbiMed Advisors was Deerfield Management, which amassed a stake valued at $16 million. Citadel Investment Group, Rhenman & Partners Asset Management, and Millennium 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 OrbiMed Advisors allocated the biggest weight to Glaukos Corporation (NYSE:GKOS), around 0.8% of its 13F portfolio. Rhenman & Partners Asset Management is also relatively very bullish on the stock, earmarking 0.71 percent of its 13F equity portfolio to GKOS.
Due to the fact that Glaukos Corporation (NYSE:GKOS) has witnessed a decline in interest from hedge fund managers, logic holds that there is a sect of hedge funds that slashed their positions entirely in the first quarter. At the top of the heap, Renaissance Technologies said goodbye to the largest stake of all the hedgies followed by Insider Monkey, comprising about $10.4 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also dropped its stock, about $2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Glaukos Corporation (NYSE:GKOS) but similarly valued. These stocks are InVitae Corporation (NYSE:NVTA), 2U Inc (NASDAQ:TWOU), Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), and Allegiant Travel Company (NASDAQ:ALGT). All of these stocks' market caps are closest to GKOS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NVTA,10,225622,-3 TWOU,14,157558,-4 DRNA,25,281860,-6 ALGT,19,252399,-5 Average,17,229360,-4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $229 million. That figure was $84 million in GKOS's case. Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) is the most popular stock in this table. On the other hand InVitae Corporation (NYSE:NVTA) is the least popular one with only 10 bullish hedge fund positions. Glaukos Corporation (NYSE:GKOS) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on GKOS, though not to the same extent, as the stock returned 22% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.