In this article we will check out the progression of hedge fund sentiment towards Amgen, Inc. (NASDAQ:AMGN) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Amgen, Inc. (NASDAQ:AMGN) going to take off soon? Investors who are in the know are becoming less hopeful. The number of long hedge fund bets were cut by 6 recently. Our calculations also showed that AMGN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). AMGN was in 52 hedge funds' portfolios at the end of the first quarter of 2020. There were 58 hedge funds in our database with AMGN positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are seen as underperforming, outdated financial vehicles of the past. While there are over 8000 funds in operation today, We hone in on the bigwigs of this club, around 850 funds. These investment experts control the majority of all hedge funds' total capital, and by keeping an eye on their inimitable equity investments, Insider Monkey has brought to light various investment strategies that have historically outperformed Mr. Market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_338852" align="aligncenter" width="400"] Richard S. Pzena of Pzena Investment Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to view the recent hedge fund action surrounding Amgen, Inc. (NASDAQ:AMGN).
What does smart money think about Amgen, Inc. (NASDAQ:AMGN)?
At Q1's end, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AMGN over the last 18 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the largest position in Amgen, Inc. (NASDAQ:AMGN), worth close to $760.2 million, accounting for 0.7% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, holding a $351.3 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other professional money managers that are bullish consist of Richard S. Pzena's Pzena Investment Management, D. E. Shaw's D E Shaw and Phill Gross and Robert Atchinson's Adage Capital Management. In terms of the portfolio weights assigned to each position Sio Capital allocated the biggest weight to Amgen, Inc. (NASDAQ:AMGN), around 7.21% of its 13F portfolio. Chiron Investment Management is also relatively very bullish on the stock, designating 3.42 percent of its 13F equity portfolio to AMGN.
Seeing as Amgen, Inc. (NASDAQ:AMGN) has faced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few funds that decided to sell off their full holdings in the third quarter. Interestingly, Michael Rockefeller and KarláKroeker's Woodline Partners dumped the biggest position of all the hedgies monitored by Insider Monkey, comprising an estimated $29.9 million in stock. Brian Ashford-Russell and Tim Woolley's fund, Polar Capital, also cut its stock, about $22.3 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 6 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to Amgen, Inc. (NASDAQ:AMGN). These stocks are NextEra Energy, Inc. (NYSE:NEE), Wells Fargo & Company (NYSE:WFC), AstraZeneca plc (NYSE:AZN), and HSBC Holdings plc (NYSE:HSBC). This group of stocks' market valuations are similar to AMGN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NEE,52,1436389,6 WFC,76,12935257,-3 AZN,26,1772166,-6 HSBC,14,378656,-4 Average,42,4130617,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $4131 million. That figure was $2057 million in AMGN's case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 14 bullish hedge fund positions. Amgen, Inc. (NASDAQ:AMGN) is not the most popular stock in this group but hedge fund interest is still above average. 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 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately AMGN wasn't nearly as popular as these 10 stocks and hedge funds that were betting on AMGN were disappointed as the stock returned 12.4% 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.
Disclosure: None. This article was originally published at Insider Monkey.