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Last year we predicted the arrival of the first US recession since 2009 and we told in advance 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 Biogen Inc. (NASDAQ:BIIB).
Biogen Inc. (NASDAQ:BIIB) investors should be aware of a decrease in support from the world's most elite money managers lately. Biogen Inc. (NASDAQ:BIIB) was in 66 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 81. There were 67 hedge funds in our database with BIIB positions at the end of the second quarter. Our calculations also showed that BIIB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind let's go over the new hedge fund action encompassing Biogen Inc. (NASDAQ:BIIB).
Alex Denner of Sarissa Capital Management
Do Hedge Funds Think BIIB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 66 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -1% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BIIB over the last 25 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Biogen Inc. (NASDAQ:BIIB), which was worth $277.8 million at the end of the third quarter. On the second spot was Sarissa Capital Management which amassed $182 million worth of shares. Citadel Investment Group, Healthcor Management LP, and D E Shaw 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 Sarissa Capital Management allocated the biggest weight to Biogen Inc. (NASDAQ:BIIB), around 14.28% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, dishing out 6.18 percent of its 13F equity portfolio to BIIB.
Judging by the fact that Biogen Inc. (NASDAQ:BIIB) has witnessed a decline in interest from the aggregate hedge fund industry, it's safe to say that there exists a select few hedgies that slashed their entire stakes heading into Q4. Intriguingly, Brandon Haley's Holocene Advisors cut the largest stake of the 750 funds followed by Insider Monkey, comprising about $45.9 million in stock. Kris Jenner, Gordon Bussard, Graham McPhail's fund, Rock Springs Capital Management, also cut its stock, about $39.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Biogen Inc. (NASDAQ:BIIB) but similarly valued. We will take a look at O'Reilly Automotive Inc (NASDAQ:ORLY), Cadence Design Systems Inc (NASDAQ:CDNS), Roku, Inc. (NASDAQ:ROKU), Schlumberger Limited. (NYSE:SLB), Lucid Group Inc. (NASDAQ:LCID), Trane Technologies plc (NYSE:TT), and Digital Realty Trust, Inc. (NYSE:DLR). This group of stocks' market caps match BIIB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ORLY,44,2294006,0 CDNS,33,1922561,0 ROKU,57,2828579,-4 SLB,39,1062933,-2 LCID,18,432623,18 TT,39,1147583,2 DLR,28,253530,-2 Average,36.9,1420259,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $1420 million. That figure was $1924 million in BIIB's case. Roku, Inc. (NASDAQ:ROKU) is the most popular stock in this table. On the other hand Lucid Group Inc. (NASDAQ:LCID) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Biogen Inc. (NASDAQ:BIIB) is more popular among hedge funds. Our overall hedge fund sentiment score for BIIB is 78.4. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately BIIB wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BIIB were disappointed as the stock returned -16.7% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.