Is Incyte Corporation (NASDAQ:INCY) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing 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 have 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.
Incyte Corporation (NASDAQ:INCY) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that INCY isn't among the 30 most popular stocks among hedge funds.
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 40 percentage points since May 2014 through May 30, 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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a peek at the latest hedge fund action regarding Incyte Corporation (NASDAQ:INCY).
What does the smart money think about Incyte Corporation (NASDAQ:INCY)?
Heading into the second quarter of 2019, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards INCY over the last 15 quarters. With hedge funds' capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Baker Bros. Advisors was the largest shareholder of Incyte Corporation (NASDAQ:INCY), with a stake worth $2947.7 million reported as of the end of March. Trailing Baker Bros. Advisors was Matrix Capital Management, which amassed a stake valued at $345.1 million. Two Sigma Advisors, D E Shaw, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers were leading the bulls' herd. Millennium Management, managed by Israel Englander, assembled the largest call position in Incyte Corporation (NASDAQ:INCY). Millennium Management had $21.5 million invested in the company at the end of the quarter. Stanley Druckenmiller's Duquesne Capital also initiated a $17.4 million position during the quarter. The following funds were also among the new INCY investors: Robert Pohly's Samlyn Capital, Peter Muller's PDT Partners, and Bruce Kovner's Caxton Associates LP.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Incyte Corporation (NASDAQ:INCY) but similarly valued. We will take a look at ORIX Corporation (NYSE:IX), Fastenal Company (NASDAQ:FAST), Hess Corporation (NYSE:HES), and Entergy Corporation (NYSE:ETR). This group of stocks' market values match INCY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IX,6,16223,-1 FAST,21,1144681,-4 HES,29,1774205,-7 ETR,33,1469733,2 Average,22.25,1101211,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $1101 million. That figure was $3889 million in INCY's case. Entergy Corporation (NYSE:ETR) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Incyte Corporation (NASDAQ:INCY) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately INCY wasn't nearly as popular as these 20 stocks and hedge funds that were betting on INCY were disappointed as the stock returned -8.5% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.