We are still in an overall bull market and many stocks that smart money investors were piling into surged through November 22nd. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 52% and 49% respectively. Hedge funds' top 3 stock picks returned 39.1% this year and beat the S&P 500 ETFs by nearly 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Neurocrine Biosciences, Inc. (NASDAQ:NBIX).
Neurocrine Biosciences, Inc. (NASDAQ:NBIX) has experienced an increase in hedge fund sentiment recently. NBIX was in 42 hedge funds' portfolios at the end of September. There were 34 hedge funds in our database with NBIX holdings at the end of the previous quarter. Our calculations also showed that NBIX isn't among the 30 most popular stocks among hedge funds.
In the financial world there are numerous methods stock market investors employ to size up stocks. A pair of the best methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can trounce their index-focused peers by a healthy margin (see the details here).
[caption id="attachment_262340" align="aligncenter" width="500"] Arthur B Cohen and Joseph Healey of Healthcor Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's view the fresh hedge fund action encompassing Neurocrine Biosciences, Inc. (NASDAQ:NBIX).
How have hedgies been trading Neurocrine Biosciences, Inc. (NASDAQ:NBIX)?
Heading into the fourth quarter of 2019, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from the previous quarter. By comparison, 39 hedge funds held shares or bullish call options in NBIX a year ago. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Joseph Edelman's Perceptive Advisors has the largest position in Neurocrine Biosciences, Inc. (NASDAQ:NBIX), worth close to $365.8 million, comprising 9.9% of its total 13F portfolio. The second largest stake is held by OrbiMed Advisors, managed by Samuel Isaly, which holds a $141.9 million position; 2.7% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism contain Arthur B Cohen and Joseph Healey's Healthcor Management, Julian Baker and Felix Baker's Baker Bros. Advisors and Kris Jenner, Gordon Bussard, Graham McPhail's Rock Springs Capital Management. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to Neurocrine Biosciences, Inc. (NASDAQ:NBIX), around 9.86% of its portfolio. Healthcor Management is also relatively very bullish on the stock, dishing out 5.09 percent of its 13F equity portfolio to NBIX.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most valuable call position in Neurocrine Biosciences, Inc. (NASDAQ:NBIX). Balyasny Asset Management had $21.6 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $9.3 million position during the quarter. The following funds were also among the new NBIX investors: Brian Ashford-Russell and Tim Woolley's Polar Capital, Paul Marshall and Ian Wace's Marshall Wace, and Phill Gross and Robert Atchinson's Adage Capital Management.
Let's check out hedge fund activity in other stocks similar to Neurocrine Biosciences, Inc. (NASDAQ:NBIX). These stocks are Carlisle Companies, Inc. (NYSE:CSL), Lamar Advertising Co (REIT) (NASDAQ:LAMR), Tradeweb Markets Inc. (NASDAQ:TW), and Gaming and Leisure Properties Inc (NASDAQ:GLPI). This group of stocks' market valuations are closest to NBIX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSL,30,454941,5 LAMR,28,238134,4 TW,37,400592,0 GLPI,31,773259,4 Average,31.5,466732,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $467 million. That figure was $1102 million in NBIX's case. Tradeweb Markets Inc. (NASDAQ:TW) is the most popular stock in this table. On the other hand Lamar Advertising Co (REIT) (NASDAQ:LAMR) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Hedge funds were also right about betting on NBIX as the stock returned 26.9% during Q4 (through 11/22) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.