We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards GlycoMimetics, Inc. (NASDAQ:GLYC) and determine whether hedge funds skillfully traded this stock.
GlycoMimetics, Inc. (NASDAQ:GLYC) was in 13 hedge funds' portfolios at the end of the first quarter of 2020. GLYC shareholders have witnessed an increase in hedge fund interest lately. There were 12 hedge funds in our database with GLYC holdings at the end of the previous quarter. Our calculations also showed that GLYC 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_673876" align="aligncenter" width="396"] John Overdeck of Two Sigma Advisors[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 9 largest lithium producing countries to identify emerging companies that are likely to deliver 1000% gains in the coming years. 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 we're going to check out the new hedge fund action regarding GlycoMimetics, Inc. (NASDAQ:GLYC).
What have hedge funds been doing with GlycoMimetics, Inc. (NASDAQ:GLYC)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GLYC over the last 18 quarters. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in GlycoMimetics, Inc. (NASDAQ:GLYC) was held by Biotechnology Value Fund / BVF Inc, which reported holding $16.8 million worth of stock at the end of September. It was followed by Camber Capital Management with a $8 million position. Other investors bullish on the company included Renaissance Technologies, Redmile Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Biotechnology Value Fund / BVF Inc allocated the biggest weight to GlycoMimetics, Inc. (NASDAQ:GLYC), around 1.56% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, dishing out 0.48 percent of its 13F equity portfolio to GLYC.
With a general bullishness amongst the heavyweights, specific money managers have jumped into GlycoMimetics, Inc. (NASDAQ:GLYC) headfirst. Renaissance Technologies, initiated the largest position in GlycoMimetics, Inc. (NASDAQ:GLYC). Renaissance Technologies had $0.7 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks similar to GlycoMimetics, Inc. (NASDAQ:GLYC). We will take a look at Sientra Inc (NASDAQ:SIEN), LSI Industries, Inc. (NASDAQ:LYTS), StoneMor Inc. (NYSE:STON), and Kura Sushi USA, Inc. (NASDAQ:KRUS). This group of stocks' market caps are similar to GLYC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SIEN,9,19799,-6 LYTS,11,15848,-3 STON,3,61615,0 KRUS,5,17006,-3 Average,7,28567,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $28 million in GLYC's case. LSI Industries, Inc. (NASDAQ:LYTS) is the most popular stock in this table. On the other hand StoneMor Inc. (NYSE:STON) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks GlycoMimetics, Inc. (NASDAQ:GLYC) is more popular among hedge funds. 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 returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on GLYC as the stock returned 32% so far in Q2 (through June 25th) 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.