At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards AstraZeneca plc (NYSE:AZN).
AstraZeneca plc (NYSE:AZN) investors should pay attention to a decrease in enthusiasm from smart money of late. Our calculations also showed that AZN 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are numerous signals shareholders employ to evaluate publicly traded companies. A couple of the most underrated signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can trounce the S&P 500 by a significant amount (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the 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 take a look at the recent hedge fund action encompassing AstraZeneca plc (NYSE:AZN).
Hedge fund activity in AstraZeneca plc (NYSE:AZN)
At Q1's end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in AZN over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of AstraZeneca plc (NYSE:AZN), with a stake worth $739.4 million reported as of the end of September. Trailing Fisher Asset Management was GQG Partners, which amassed a stake valued at $355.3 million. Arrowstreet Capital, Renaissance Technologies, and Citadel Investment Group 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 Healthcare Value Capital allocated the biggest weight to AstraZeneca plc (NYSE:AZN), around 5.64% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, dishing out 5.37 percent of its 13F equity portfolio to AZN.
Judging by the fact that AstraZeneca plc (NYSE:AZN) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of hedgies that slashed their positions entirely last quarter. Intriguingly, Israel Englander's Millennium Management sold off the biggest stake of the 750 funds watched by Insider Monkey, comprising close to $18.3 million in stock, and Yi Xin's Ariose Capital was right behind this move, as the fund dropped about $8.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as AstraZeneca plc (NYSE:AZN) but similarly valued. These stocks are HSBC Holdings plc (NYSE:HSBC), Philip Morris International Inc. (NYSE:PM), Thermo Fisher Scientific Inc. (NYSE:TMO), and AbbVie Inc (NYSE:ABBV). This group of stocks' market values resemble AZN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HSBC,14,378656,-4 PM,48,2541197,-9 TMO,80,3187947,7 ABBV,81,5118264,10 Average,55.75,2806516,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 55.75 hedge funds with bullish positions and the average amount invested in these stocks was $2807 million. That figure was $1772 million in AZN's case. AbbVie Inc (NYSE:ABBV) 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. AstraZeneca plc (NYSE:AZN) is not the least popular stock in this group but hedge fund interest is still below average. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on AZN as the stock returned 22.3% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.