Before we spend countless hours researching a company, we 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 Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) investors should be aware of an increase in hedge fund sentiment recently. ALNY was in 34 hedge funds' portfolios at the end of the first quarter of 2020. There were 33 hedge funds in our database with ALNY holdings at the end of the previous quarter. Our calculations also showed that ALNY 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.
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 51 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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a glance at the recent hedge fund action encompassing Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).
How have hedgies been trading Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)?
Heading into the second quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ALNY over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) was held by Farallon Capital, which reported holding $163.3 million worth of stock at the end of September. It was followed by Maverick Capital with a $145.8 million position. Other investors bullish on the company included 12 West Capital Management, Slate Path Capital, and Casdin Capital. In terms of the portfolio weights assigned to each position Casdin Capital allocated the biggest weight to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), around 6.76% of its 13F portfolio. Slate Path Capital is also relatively very bullish on the stock, earmarking 5.99 percent of its 13F equity portfolio to ALNY.
Consequently, key hedge funds were leading the bulls' herd. Partner Fund Management, managed by Christopher James, initiated the largest position in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). Partner Fund Management had $8.9 million invested in the company at the end of the quarter. Henrik Rhenman's Rhenman & Partners Asset Management also initiated a $8.7 million position during the quarter. The other funds with new positions in the stock are Cliff Asness's AQR Capital Management, Arsani William's Logos Capital, and David Harding's Winton Capital Management.
Let's go over hedge fund activity in other stocks similar to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). We will take a look at MPLX LP (NYSE:MPLX), Laboratory Corp. of America Holdings (NYSE:LH), Cincinnati Financial Corporation (NASDAQ:CINF), and Kansas City Southern (NYSE:KSU). This group of stocks' market valuations resemble ALNY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MPLX,11,179942,-4 LH,45,1054505,-8 CINF,31,484343,0 KSU,45,524207,5 Average,33,560749,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $561 million. That figure was $841 million in ALNY's case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 11 bullish hedge fund positions. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on ALNY as the stock returned 24.3% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.