"Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum," said Clearbridge Investments in its market commentary. We aren't sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).
Is Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) the right investment to pursue these days? The smart money is in a pessimistic mood. The number of bullish hedge fund bets dropped by 4 lately. Our calculations also showed that ALNY isn't among the 30 most popular stocks among hedge funds. ALNY was in 28 hedge funds' portfolios at the end of December. There were 32 hedge funds in our database with ALNY holdings at the end of the previous quarter.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's review the new hedge fund action surrounding Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).
How are hedge funds trading Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)?
At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ALNY over the last 14 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Maverick Capital, managed by Lee Ainslie, holds the biggest position in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). Maverick Capital has a $204.4 million position in the stock, comprising 3% of its 13F portfolio. Sitting at the No. 2 spot is Joel Ramin of 12 West Capital Management, with a $53.6 million position; 5.5% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish include Roberto Mignone's Bridger Management, Stephen DuBois's Camber Capital Management and Thomas Steyer's Farallon Capital.
Because Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) has witnessed declining sentiment from the entirety of the hedge funds we track, it's easy to see that there exists a select few money managers that decided to sell off their full holdings heading into Q3. It's worth mentioning that Steve Cohen's Point72 Asset Management sold off the biggest stake of the 700 funds watched by Insider Monkey, valued at an estimated $77.5 million in stock. Jim Simons's fund, Renaissance Technologies, also cut its stock, about $5.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 4 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks similar to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). We will take a look at Sensata Technologies Holding N.V. (NYSE:ST), Grupo Televisa SAB (NYSE:TV), PulteGroup, Inc. (NYSE:PHM), and Sarepta Therapeutics Inc (NASDAQ:SRPT). This group of stocks' market caps are similar to ALNY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ST,23,1307637,-3 TV,14,786715,-5 PHM,24,567082,6 SRPT,41,940036,-2 Average,25.5,900368,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $900 million. That figure was $628 million in ALNY's case. Sarepta Therapeutics Inc (NASDAQ:SRPT) is the most popular stock in this table. On the other hand Grupo Televisa SAB (NYSE:TV) is the least popular one with only 14 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 calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on ALNY as the stock returned 23.7% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.