Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
Is Sanofi (NASDAQ:SNY) a buy right now? Money managers are turning less bullish. The number of long hedge fund positions retreated by 1 recently. Our calculations also showed that SNY isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are plenty of signals investors put to use to appraise stocks. A pair of the less known signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the S&P 500 by a significant margin (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the recent hedge fund action surrounding Sanofi (NASDAQ:SNY).
What does smart money think about Sanofi (NASDAQ:SNY)?
At Q2's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the first quarter of 2019. On the other hand, there were a total of 23 hedge funds with a bullish position in SNY a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Sanofi (NASDAQ:SNY) was held by Fisher Asset Management, which reported holding $729.9 million worth of stock at the end of March. It was followed by Point72 Asset Management with a $55.6 million position. Other investors bullish on the company included Arrowstreet Capital, Eversept Partners, and Balyasny Asset Management.
Since Sanofi (NASDAQ:SNY) has faced declining sentiment from hedge fund managers, it's safe to say that there exists a select few hedge funds that decided to sell off their entire stakes heading into Q3. Interestingly, Dmitry Balyasny's Balyasny Asset Management dumped the biggest stake of all the hedgies followed by Insider Monkey, comprising an estimated $12 million in stock, and Michael Castor's Sio Capital was right behind this move, as the fund dumped about $6.9 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q3.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Sanofi (NASDAQ:SNY) but similarly valued. We will take a look at AstraZeneca plc (NYSE:AZN), Texas Instruments Incorporated (NASDAQ:TXN), Rio Tinto Group (NYSE:RIO), and The Toronto-Dominion Bank (NYSE:TD). This group of stocks' market caps resemble SNY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AZN,24,1602389,-4 TXN,43,2046831,0 RIO,24,1913982,2 TD,18,648247,0 Average,27.25,1552862,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $1553 million. That figure was $915 million in SNY's case. Texas Instruments Incorporated (NASDAQ:TXN) is the most popular stock in this table. On the other hand The Toronto-Dominion Bank (NYSE:TD) is the least popular one with only 18 bullish hedge fund positions. Sanofi (NASDAQ:SNY) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on SNY as the stock returned 7.1% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.