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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) investors should pay attention to a decrease in hedge fund interest of late. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) was in 27 hedge funds' portfolios at the end of June. The all time high for this statistic is 42. There were 33 hedge funds in our database with BHVN holdings at the end of March. Our calculations also showed that BHVN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Larry Robbins of Glenview 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. Now we're going to check out the key hedge fund action encompassing Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN).
Do Hedge Funds Think BHVN Is A Good Stock To Buy Now?
At Q2's end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BHVN over the last 24 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) was held by Marshall Wace LLP, which reported holding $265.3 million worth of stock at the end of June. It was followed by Polar Capital with a $87 million position. Other investors bullish on the company included Knoll Capital Management, Armistice Capital, and Glenview Capital. In terms of the portfolio weights assigned to each position Knoll Capital Management allocated the biggest weight to Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), around 43.44% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, earmarking 4.51 percent of its 13F equity portfolio to BHVN.
Because Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of funds that decided to sell off their entire stakes heading into Q3. At the top of the heap, Kamran Moghtaderi's Eversept Partners dropped the biggest investment of all the hedgies followed by Insider Monkey, worth an estimated $16.6 million in stock. Bihua Chen's fund, Cormorant Asset Management, also sold off its stock, about $13.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 6 funds heading into Q3.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) but similarly valued. These stocks are I-Mab (NASDAQ:IMAB), MDU Resources Group Inc (NYSE:MDU), American Eagle Outfitters Inc. (NYSE:AEO), MP Materials Corp. (NYSE:MP), Littelfuse, Inc. (NASDAQ:LFUS), Thor Industries, Inc. (NYSE:THO), and Endava plc (NYSE:DAVA). This group of stocks' market caps match BHVN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IMAB,18,873769,-2 MDU,21,169504,0 AEO,41,1875130,-2 MP,20,2565580,-9 LFUS,27,483266,6 THO,26,179875,5 DAVA,16,197353,7 Average,24.1,906354,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $906 million. That figure was $666 million in BHVN's case. American Eagle Outfitters Inc. (NYSE:AEO) is the most popular stock in this table. On the other hand Endava plc (NYSE:DAVA) is the least popular one with only 16 bullish hedge fund positions. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BHVN is 40.3. 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 5 most popular stocks among hedge funds 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 and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on BHVN as the stock returned 37.6% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.