Before we spend many hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Pfizer Inc. (NYSE:PFE).
Pfizer Inc. (NYSE:PFE) was in 58 hedge funds' portfolios at the end of September. PFE has seen an increase in hedge fund interest lately. There were 48 hedge funds in our database with PFE holdings at the end of the previous quarter. Our calculations also showed that PFE isn't among the 30 most popular stocks among hedge funds.
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 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to view the recent hedge fund action surrounding Pfizer Inc. (NYSE:PFE).
How are hedge funds trading Pfizer Inc. (NYSE:PFE)?
At Q3's end, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PFE over the last 13 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Pfizer Inc. (NYSE:PFE), with a stake worth $1.78 billion reported as of the end of September. Trailing Fisher Asset Management was AQR Capital Management, which amassed a stake valued at $525.8 million. Diamond Hill Capital, Adage Capital Management, and Levin Capital Strategies were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key money managers were leading the bulls' herd. Tremblant Capital, managed by Brett Barakett, assembled the most valuable position in Pfizer Inc. (NYSE:PFE). Tremblant Capital had $46.4 million invested in the company at the end of the quarter. Glenn Russell Dubin's Highbridge Capital Management also initiated a $9.3 million position during the quarter. The other funds with brand new PFE positions are Lee Ainslie's Maverick Capital, Deepak Gulati's Argentiere Capital, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital.
Let's check out hedge fund activity in other stocks similar to Pfizer Inc. (NYSE:PFE). We will take a look at UnitedHealth Group Inc. (NYSE:UNH), Nestlé S.A. (OTCMKTS:NSRGY), Wells Fargo & Company (NYSE:WFC), and Mastercard Incorporated (NYSE:MA). This group of stocks' market values resemble PFE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UNH,71,6422611,3 NSRGY,5,1575298,0 WFC,79,29963465,6 MA,95,10068933,7 Average,62.5,12008,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 62.5 hedge funds with bullish positions and the average amount invested in these stocks was $12.01 billion. That figure was $4.30 billion in PFE's case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand Nestlé S.A. (OTCMKTS:NSRGY) is the least popular one with only 5 bullish hedge fund positions. Pfizer Inc. (NYSE:PFE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. In this regard MA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.