While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding GlycoMimetics, Inc. (NASDAQ:GLYC).
Is GLYC a good stock to buy now? GlycoMimetics, Inc. (NASDAQ:GLYC) investors should pay attention to a decrease in enthusiasm from smart money in recent months. GlycoMimetics, Inc. (NASDAQ:GLYC) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 18. Our calculations also showed that GLYC isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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. 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 66 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.
Oleg Nodelman EcoR1 Capital
Oleg Nodelman of EcoR1 Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's take a peek at the recent hedge fund action encompassing GlycoMimetics, Inc. (NASDAQ:GLYC).
Do Hedge Funds Think GLYC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter of 2020. On the other hand, there were a total of 8 hedge funds with a bullish position in GLYC a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Biotechnology Value Fund / BVF Inc held the most valuable stake in GlycoMimetics, Inc. (NASDAQ:GLYC), which was worth $22.2 million at the end of the third quarter. On the second spot was EcoR1 Capital which amassed $11.4 million worth of shares. Camber Capital Management, EcoR1 Capital, and D E Shaw 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to GlycoMimetics, Inc. (NASDAQ:GLYC), around 1.21% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, designating 0.82 percent of its 13F equity portfolio to GLYC.
Due to the fact that GlycoMimetics, Inc. (NASDAQ:GLYC) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers who sold off their entire stakes last quarter. At the top of the heap, Israel Englander's Millennium Management said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, valued at close to $0.5 million in stock, and Peter Muller's PDT Partners was right behind this move, as the fund dropped about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as GlycoMimetics, Inc. (NASDAQ:GLYC) but similarly valued. We will take a look at NewHold Investment Corp. (NASDAQ:NHIC), Natural Resource Partners LP (NYSE:NRP), CIM Commercial Trust Corporation (NASDAQ:CMCT), Coastal Financial Corporation (NASDAQ:CCB), Tuniu Corporation (NASDAQ:TOUR), Mid Penn Bancorp (NASDAQ:MPB), and Emerald Holding, Inc. (NYSE:EEX). This group of stocks' market caps resemble GLYC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NHIC,11,43710,11 NRP,2,6814,0 CMCT,4,11308,0 CCB,2,12266,0 TOUR,2,9175,0 MPB,3,3094,-1 EEX,6,1661,-2 Average,4.3,12575,1.1 [/table]
As you can see these stocks had an average of 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $45 million in GLYC's case. NewHold Investment Corp. (NASDAQ:NHIC) is the most popular stock in this table. On the other hand Natural Resource Partners LP (NYSE:NRP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks GlycoMimetics, Inc. (NASDAQ:GLYC) is more popular among hedge funds. Our overall hedge fund sentiment score for GLYC is 73. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on GLYC as the stock returned 20.2% since the end of September (through 12/8) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
