Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Allergan plc (NYSE:AGN) based on that data. We also compare Allergan's hedge fund sentiment against its peers like The Charles Schwab Corp (NYSE:SCHW), Raytheon Company (NYSE:RTN), Target Corporation (NYSE:TGT), and General Motors Company (NYSE:GM).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_25882" align="aligncenter" width="477"] Dan Loeb of Third Point[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We're going to review the latest hedge fund action encompassing Allergan plc (NYSE:AGN).
How have hedgies been trading Allergan plc (NYSE:AGN)?
At Q3's end, a total of 81 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 1% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AGN over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Allergan plc (NYSE:AGN) was held by Adage Capital Management, which reported holding $1072.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $618.3 million position. Other investors bullish on the company included Third Point, Paulson & Co, and Millennium Management. In terms of the portfolio weights assigned to each position MFN Partners allocated the biggest weight to Allergan plc (NYSE:AGN), around 35.22% of its portfolio. Sarissa Capital Management is also relatively very bullish on the stock, earmarking 21.99 percent of its 13F equity portfolio to AGN.
As one would reasonably expect, some big names were breaking ground themselves. Third Point, managed by Dan Loeb, established the most valuable position in Allergan plc (NYSE:AGN). Third Point had $605.8 million invested in the company at the end of the quarter. Scott Ferguson's Sachem Head Capital also initiated a $212.9 million position during the quarter. The other funds with new positions in the stock are James Dinan's York Capital Management, Isaac Corre's Governors Lane, and John Orrico's Water Island Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Allergan plc (NYSE:AGN) but similarly valued. We will take a look at The Charles Schwab Corp (NYSE:SCHW), Raytheon Company (NYSE:RTN), Target Corporation (NYSE:TGT), and General Motors Company (NYSE:GM). This group of stocks' market values resemble AGN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCHW,52,3125721,4 RTN,49,3254934,10 TGT,53,2073012,16 GM,68,6375993,19 Average,55.5,3707415,12.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 55.5 hedge funds with bullish positions and the average amount invested in these stocks was $3707 million. That figure was $8207 million in AGN's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand Raytheon Company (NYSE:RTN) is the least popular one with only 49 bullish hedge fund positions. Compared to these stocks Allergan plc (NYSE:AGN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Hedge funds were also right about betting on AGN as the stock returned 9.7% during Q4 (through 11/22) 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.