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Here is What Hedge Funds Think About Guardant Health, Inc. (GH)

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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Guardant Health, Inc. (NASDAQ:GH), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Guardant Health, Inc. (NASDAQ:GH) was in 49 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 52. GH has seen an increase in enthusiasm from smart money of late. There were 41 hedge funds in our database with GH holdings at the end of March. Our calculations also showed that GH isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Glen Kacher of Light Street Capital

At Insider Monkey, we scour multiple sources to uncover 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 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 go over the recent hedge fund action surrounding Guardant Health, Inc. (NASDAQ:GH).

Do Hedge Funds Think GH Is A Good Stock To Buy Now?

At Q2's end, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in GH over the last 24 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

The largest stake in Guardant Health, Inc. (NASDAQ:GH) was held by Viking Global, which reported holding $528.6 million worth of stock at the end of June. It was followed by Coatue Management with a $330.5 million position. Other investors bullish on the company included OrbiMed Advisors, Polar Capital, and Light Street Capital. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to Guardant Health, Inc. (NASDAQ:GH), around 4.48% of its 13F portfolio. Light Street Capital is also relatively very bullish on the stock, dishing out 2.76 percent of its 13F equity portfolio to GH.

As industrywide interest jumped, specific money managers have been driving this bullishness. Light Street Capital, managed by Glen Kacher, created the largest position in Guardant Health, Inc. (NASDAQ:GH). Light Street Capital had $63.6 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $33.6 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson's Adage Capital Management, Steve Cohen's Point72 Asset Management, and Frank Fu's CaaS Capital.

Let's now review 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 The Boston Beer Company Inc (NYSE:SAM), American Homes 4 Rent (NYSE:AMH), Allegion plc (NYSE:ALLE), Universal Health Services, Inc. (NYSE:UHS), Sociedad Química y Minera de Chile S.A. (NYSE:SQM), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), and Annaly Capital Management, Inc. (NYSE:NLY). This group of stocks' market valuations are similar to GH's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SAM,42,933501,13 AMH,31,757590,4 ALLE,37,1202742,10 UHS,41,724141,-2 SQM,19,156249,3 CHRW,31,299194,8 NLY,19,98211,4 Average,31.4,595947,5.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $596 million. That figure was $1709 million in GH's case. The Boston Beer Company Inc (NYSE:SAM) is the most popular stock in this table. On the other hand Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Guardant Health, Inc. (NASDAQ:GH) is more popular among hedge funds. Our overall hedge fund sentiment score for GH is 88.3. 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 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Unfortunately GH wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GH were disappointed as the stock returned -13.4% since the end of the second quarter (through 10/1) 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 most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.