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 at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) and determine whether the smart money was really smart about this stock.
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) has seen an increase in hedge fund sentiment recently. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) was in 38 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 34 hedge funds in our database with ALNY holdings at the end of March. Our calculations also showed that ALNY isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
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 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ricky Sandler of Eminence Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are also checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we're going to check out the recent hedge fund action regarding Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).
Hedge fund activity in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)
At the end of the second quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ALNY over the last 20 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Maverick Capital held the most valuable stake in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), which was worth $164.9 million at the end of the third quarter. On the second spot was Farallon Capital which amassed $155.5 million worth of shares. 12 West Capital Management, Slate Path Capital, and Casdin Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position 12 West Capital Management allocated the biggest weight to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), around 5.63% of its 13F portfolio. Slate Path Capital is also relatively very bullish on the stock, earmarking 5.1 percent of its 13F equity portfolio to ALNY.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) headfirst. Eminence Capital, managed by Ricky Sandler, initiated the most outsized position in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). Eminence Capital had $26.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $8.6 million position during the quarter. The other funds with brand new ALNY positions are John Overdeck and David Siegel's Two Sigma Advisors, Benjamin A. Smith's Laurion Capital Management, and Greg Eisner's Engineers Gate Manager.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) but similarly valued. These stocks are Cheniere Energy Partners LP (NYSE:CQP), Teleflex Incorporated (NYSE:TFX), Freeport-McMoRan Inc. (NYSE:FCX), W.W. Grainger, Inc. (NYSE:GWW), Occidental Petroleum Corporation (NYSE:OXY), Weyerhaeuser Co. (NYSE:WY), and CMS Energy Corporation (NYSE:CMS). This group of stocks' market valuations are similar to ALNY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CQP,3,9442,0 TFX,28,651313,-4 FCX,53,1222479,11 GWW,28,426625,2 OXY,34,1758766,-1 WY,33,400683,-2 CMS,30,500702,2 Average,29.9,710001,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $710 million. That figure was $983 million in ALNY's case. Freeport-McMoRan Inc. (NYSE:FCX) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 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 overall hedge fund sentiment score for ALNY is 74. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately ALNY wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ALNY were disappointed as the stock returned -10.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.