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In this article we are going to use hedge fund sentiment as a tool and determine whether Moderna, Inc. (NASDAQ:MRNA) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Moderna, Inc. (NASDAQ:MRNA) has experienced an increase in hedge fund sentiment lately. Moderna, Inc. (NASDAQ:MRNA) was in 49 hedge funds' portfolios at the end of September. The all time high for this statistic was previously 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MRNA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we're going to go over the fresh hedge fund action surrounding Moderna, Inc. (NASDAQ:MRNA).
Philippe Laffont of Coatue Management
Do Hedge Funds Think MRNA Is A Good Stock To Buy Now?
At third quarter's end, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in MRNA a year ago. 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, Coatue Management held the most valuable stake in Moderna, Inc. (NASDAQ:MRNA), which was worth $2328 million at the end of the third quarter. On the second spot was Theleme Partners which amassed $1522.9 million worth of shares. Lone Pine Capital, Citadel Investment Group, and Renaissance Technologies 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 Theleme Partners allocated the biggest weight to Moderna, Inc. (NASDAQ:MRNA), around 43.47% of its 13F portfolio. Coatue Management is also relatively very bullish on the stock, designating 9.47 percent of its 13F equity portfolio to MRNA.
Now, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in Moderna, Inc. (NASDAQ:MRNA). Arrowstreet Capital had $159.6 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson's Adage Capital Management also initiated a $125.9 million position during the quarter. The following funds were also among the new MRNA investors: Louis Bacon's Moore Global Investments, Ken Heebner's Capital Growth Management, and McKinley Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Moderna, Inc. (NASDAQ:MRNA) but similarly valued. We will take a look at NextEra Energy, Inc. (NYSE:NEE), Linde plc (NYSE:LIN), Charter Communications, Inc. (NASDAQ:CHTR), Philip Morris International Inc. (NYSE:PM), Intuit Inc. (NASDAQ:INTU), Honeywell International Inc. (NASDAQ:HON), and QUALCOMM, Incorporated (NASDAQ:QCOM). This group of stocks' market valuations match MRNA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NEE,53,2374429,-6 LIN,46,4769164,-9 CHTR,74,18794064,-1 PM,48,5924682,2 INTU,64,6152464,-2 HON,45,927738,-12 QCOM,70,3519652,-2 Average,57.1,6066028,-4.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 57.1 hedge funds with bullish positions and the average amount invested in these stocks was $6066 million. That figure was $7315 million in MRNA's case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand Honeywell International Inc. (NASDAQ:HON) is the least popular one with only 45 bullish hedge fund positions. Moderna, Inc. (NASDAQ:MRNA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MRNA is 46.9. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately MRNA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MRNA investors were disappointed as the stock returned -8.4% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.