Do Hedge Funds Love GlaxoSmithKline plc (GSK)?

·6 min read

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards GlaxoSmithKline plc (NYSE:GSK) changed recently.

GlaxoSmithKline plc (NYSE:GSK) shareholders have witnessed an increase in hedge fund interest lately. GlaxoSmithKline plc (NYSE:GSK) was in 28 hedge funds' portfolios at the end of June. The all time high for this statistic is 35. There were 25 hedge funds in our database with GSK positions at the end of the first quarter. Our calculations also showed that GSK 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.

Michael Gelband of ExodusPoint 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. Keeping this in mind we're going to view the recent hedge fund action encompassing GlaxoSmithKline plc (NYSE:GSK).

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

At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in GSK a year ago. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Is GSK A Good Stock To Buy?
Is GSK A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in GlaxoSmithKline plc (NYSE:GSK). Fisher Asset Management has a $698.8 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $360.8 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Stephen DuBois's Camber Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Kahn Brothers. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to GlaxoSmithKline plc (NYSE:GSK), around 7.93% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, setting aside 7.4 percent of its 13F equity portfolio to GSK.

With a general bullishness amongst the heavyweights, some big names have jumped into GlaxoSmithKline plc (NYSE:GSK) headfirst. Point State Capital, managed by Zach Schreiber, established the biggest position in GlaxoSmithKline plc (NYSE:GSK). Point State Capital had $6.8 million invested in the company at the end of the quarter. Ray Dalio's Bridgewater Associates also made a $4.5 million investment in the stock during the quarter. The other funds with brand new GSK positions are Michael Gelband's ExodusPoint Capital, Kenneth Mario Garschina's Mason Capital Management, and D. E. Shaw's D E Shaw.

Let's go over hedge fund activity in other stocks similar to GlaxoSmithKline plc (NYSE:GSK). These stocks are S&P Global Inc. (NYSE:SPGI), Stryker Corporation (NYSE:SYK), Micron Technology, Inc. (NASDAQ:MU), Moderna, Inc. (NASDAQ:MRNA), Uber Technologies, Inc. (NYSE:UBER), Anthem Inc (NYSE:ANTM), and Lam Research Corporation (NASDAQ:LRCX). This group of stocks' market values are closest to GSK's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPGI,71,7278360,5 SYK,48,3369193,2 MU,87,6333058,-13 MRNA,37,5754554,-2 UBER,135,10412577,5 ANTM,67,4838358,9 LRCX,58,3719258,4 Average,71.9,5957908,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 71.9 hedge funds with bullish positions and the average amount invested in these stocks was $5958 million. That figure was $1466 million in GSK's case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand Moderna, Inc. (NASDAQ:MRNA) is the least popular one with only 37 bullish hedge fund positions. Compared to these stocks GlaxoSmithKline plc (NYSE:GSK) is even less popular than MRNA. Our overall hedge fund sentiment score for GSK is 32. 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. Hedge funds dodged a bullet by taking a bearish stance towards GSK. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th but managed to beat the market again by 4.5 percentage points. Unfortunately GSK wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); GSK investors were disappointed as the stock returned -0.8% since the end of the second quarter (through 10/15) 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.

Get real-time email alerts: Follow Glaxosmithkline Plc (NYSE:GSK)

Suggested Articles:

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

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting