Before we spend countless hours researching a
company, we'd like to analyze what insiders, hedge funds and
billionaire investors think of the stock first. This is a necessary
first step in our investment process because our research has shown
that the elite investors' consensus returns have been exceptional.
In the following paragraphs, we find out what the billionaire
investors and hedge funds think of GW Pharmaceuticals plc
GW Pharmaceuticals plc (NASDAQ:GWPH)
shareholders have witnessed a decrease in hedge fund sentiment of
late. Our calculations also showed that gwph isn't among the
30 most popular stocks
among hedge funds.
Why do we pay any attention at all to hedge fund
sentiment? Our research has shown that hedge funds' large-cap stock
picks indeed failed to beat the market between 1999 and 2016.
However, we were able to identify in advance a select group of
hedge fund holdings that outperformed the market by 40 percentage
points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we
believe hedge fund sentiment is an extremely useful indicator that
investors should pay attention to.
We're going to take a peek at the latest hedge
fund action encompassing GW Pharmaceuticals plc (NASDAQ:GWPH).
At the end of the first quarter, a total of 23 of
the hedge funds tracked by Insider Monkey were long this stock, a
change of -8% from one quarter earlier. On the other hand, there
were a total of 21 hedge funds with a bullish position in GWPH a
year ago. So, let's examine which hedge funds were among the top
holders of the stock and which hedge funds were making big
Among these funds, Scopia Capital held the
most valuable stake in GW Pharmaceuticals plc (NASDAQ:GWPH), which
was worth $126.4 million at the end of the first quarter. On the
second spot was Rock Springs Capital Management which amassed $118
million worth of shares. Moreover, Citadel Investment Group, Baker
Bros. Advisors, and Polar Capital were also bullish on GW
Pharmaceuticals plc (NASDAQ:GWPH), allocating a large percentage of
their portfolios to this stock.
Due to the fact that GW Pharmaceuticals plc
(NASDAQ:GWPH) has witnessed bearish sentiment from the aggregate
hedge fund industry, we can see that there exists a select few
money managers that decided to sell off their entire stakes last
quarter. It's worth mentioning that James E. Flynn's Deerfield Management
sold off the largest stake of all the hedgies watched by Insider
Monkey, totaling about $10.6 million in call options. Matthew
Hulsizer's fund, PEAK6 Capital
Management, also dropped its call options, about $2.9 million
worth. These transactions are interesting, as total hedge fund
interest was cut 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 GW
Pharmaceuticals plc (NASDAQ:GWPH) but similarly valued. We will
take a look at Polaris Industries Inc. (NYSE:PII), Fluor Corporation
Corporation (NYSE:TDC), and United
Therapeutics Corporation (NASDAQ:UTHR). All of these
stocks' market caps are similar to GWPH's market cap.
[table] Ticker, No of HFs with positions, Total
Value of HF Positions (x1000), Change in HF Position PII,16,89139,1
FLR,22,311072,2 TDC,20,294027,-1 UTHR,21,1050522,-2
View table here if
you experience formatting issues.
As you can see these stocks had an average of
19.75 hedge funds with bullish positions and the average amount
invested in these stocks was $436 million. That figure was $540
million in GWPH's case. Fluor Corporation (NYSE:FLR) is the most
popular stock in this table. On the other hand Polaris Industries
Inc. (NYSE:PII) is the least
popular one with only 16 bullish hedge fund positions. Compared to
these stocks GW Pharmaceuticals plc (NASDAQ:GWPH) is more popular
among hedge funds. Our calculations showed that top 20 most popular
stocks among hedge funds returned 1.9% in Q2 through May 30th
and outperformed the S&P 500 ETF (SPY) by more than 3
percentage points. Hedge funds were also right about betting on
GWPH as the stock returned 4.7% during the same period 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.