Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about AbbVie Inc (NYSE:ABBV) in this article.
AbbVie Inc (NYSE:ABBV) investors should pay attention to a decrease in enthusiasm from smart money lately. AbbVie Inc (NYSE:ABBV) was in 72 hedge funds' portfolios at the end of March. The all time high for this statistic is 89. There were 83 hedge funds in our database with ABBV holdings at the end of December. Our calculations also showed that ABBV isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cathie Wood of ARK Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we're going to take a look at the key hedge fund action encompassing AbbVie Inc (NYSE:ABBV).
Do Hedge Funds Think ABBV Is A Good Stock To Buy Now?
At the end of March, a total of 72 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 81 hedge funds with a bullish position in ABBV a year ago. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Berkshire Hathaway was the largest shareholder of AbbVie Inc (NYSE:ABBV), with a stake worth $2474.8 million reported as of the end of March. Trailing Berkshire Hathaway was Orbis Investment Management, which amassed a stake valued at $737.7 million. Two Sigma Advisors, GQG Partners, and Diamond Hill 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 Copernicus Capital Management allocated the biggest weight to AbbVie Inc (NYSE:ABBV), around 10.49% of its 13F portfolio. HealthInvest Partners AB is also relatively very bullish on the stock, earmarking 5.95 percent of its 13F equity portfolio to ABBV.
Due to the fact that AbbVie Inc (NYSE:ABBV) has faced bearish sentiment from the smart money, it's safe to say that there is a sect of hedgies who were dropping their positions entirely in the first quarter. It's worth mentioning that Jeremy Green's Redmile Group sold off the largest stake of all the hedgies watched by Insider Monkey, totaling about $148.8 million in stock, and Farallon Capital was right behind this move, as the fund said goodbye to about $123.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 11 funds in the first quarter.
Let's check out hedge fund activity in other stocks similar to AbbVie Inc (NYSE:ABBV). These stocks are Broadcom Inc (NASDAQ:AVGO), Accenture Plc (NYSE:ACN), Thermo Fisher Scientific Inc. (NYSE:TMO), Eli Lilly and Company (NYSE:LLY), Texas Instruments Incorporated (NASDAQ:TXN), BHP Group (NYSE:BHP), and McDonald's Corporation (NYSE:MCD). This group of stocks' market valuations resemble ABBV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVGO,53,3313279,-6 ACN,48,2350908,-2 TMO,79,6254066,-10 LLY,55,2522416,5 TXN,42,2532768,-14 BHP,18,873686,-2 MCD,67,3783829,5 Average,51.7,3090136,-3.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.7 hedge funds with bullish positions and the average amount invested in these stocks was $3090 million. That figure was $5917 million in ABBV's case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 18 bullish hedge fund positions. AbbVie Inc (NYSE:ABBV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ABBV is 62.5. 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. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on ABBV, though not to the same extent, as the stock returned 7.9% since Q1 (through June 11th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.