The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Novo Nordisk A/S (NYSE:NVO) based on those filings.
Is Novo Nordisk A/S (NYSE:NVO) a superb investment today? Money managers are in a bullish mood. The number of long hedge fund bets went up by 1 lately. Our calculations also showed that NVO 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 today’s marketplace there are tons of gauges market participants can use to grade stocks. Some of the most under-the-radar gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite money managers can outperform the market by a solid amount (see the details here).
[caption id="attachment_193030" align="aligncenter" width="392"] Tom Gayner of Markel Gayner Asset Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. Keeping this in mind we're going to take a look at the latest hedge fund action regarding Novo Nordisk A/S (NYSE:NVO).
What have hedge funds been doing with Novo Nordisk A/S (NYSE:NVO)?
At Q1's end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in NVO a year ago. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Novo Nordisk A/S (NYSE:NVO), with a stake worth $1677.2 million reported as of the end of September. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $922.6 million. Arrowstreet Capital, Markel Gayner Asset Management, and Sphera Global Healthcare Fund 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 Sphera Global Healthcare Fund allocated the biggest weight to Novo Nordisk A/S (NYSE:NVO), around 4.34% of its 13F portfolio. Sivik Global Healthcare is also relatively very bullish on the stock, dishing out 3.22 percent of its 13F equity portfolio to NVO.
Now, key money managers were leading the bulls' herd. Sphera Global Healthcare Fund, managed by Doron Breen and Mori Arkin, assembled the most valuable position in Novo Nordisk A/S (NYSE:NVO). Sphera Global Healthcare Fund had $34.7 million invested in the company at the end of the quarter. Krishen Sud's Sivik Global Healthcare also made a $8.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser's Magnetar Capital, Greg Eisner's Engineers Gate Manager, and Michael Gelband's ExodusPoint Capital.
Let's check out hedge fund activity in other stocks similar to Novo Nordisk A/S (NYSE:NVO). These stocks are Abbott Laboratories (NYSE:ABT), Chevron Corporation (NYSE:CVX), Eli Lilly and Company (NYSE:LLY), and The Unilever Group (NYSE:UL). This group of stocks' market valuations are similar to NVO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABT,62,2189754,0 CVX,53,1646070,6 LLY,43,1323452,0 UL,13,207786,-4 Average,42.75,1341766,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.75 hedge funds with bullish positions and the average amount invested in these stocks was $1342 million. That figure was $3037 million in NVO's case. Abbott Laboratories (NYSE:ABT) is the most popular stock in this table. On the other hand The Unilever Group (NYSE:UL) is the least popular one with only 13 bullish hedge fund positions. Novo Nordisk A/S (NYSE:NVO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately NVO wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NVO investors were disappointed as the stock returned 10.6% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.