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Jazz Pharmaceuticals Public Limited Company (JAZZ): Are Hedge Funds Right About This Stock?

Nina Todic

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ).

Is Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ) a sound investment today? Investors who are in the know are getting more bullish. The number of bullish hedge fund bets went up by 2 recently. Our calculations also showed that jazz isn't among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Samuel Isaly Orbimed Advisors

We're going to take a glance at the recent hedge fund action encompassing Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ).

Hedge fund activity in Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ)

At Q3's end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 33 hedge funds with a bullish position in JAZZ at the beginning of this year. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

No of Hedge Funds with JAZZ Positions

More specifically, Senator Investment Group was the largest shareholder of Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ), with a stake worth $172.3 million reported as of the end of September. Trailing Senator Investment Group was Partner Fund Management, which amassed a stake valued at $161.1 million. Viking Global, Renaissance Technologies, and OrbiMed Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

As aggregate interest increased, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, established the most outsized position in Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ). Millennium Management had $19.2 million invested in the company at the end of the quarter. David Costen Haley's HBK Investments also initiated a $8.3 million position during the quarter. The other funds with new positions in the stock are Joel Greenblatt's Gotham Asset Management, Matthew Tewksbury's Stevens Capital Management, and Nick Thakore's Diametric Capital.

Let's also examine hedge fund activity in other stocks similar to Jazz Pharmaceuticals plc (NASDAQ:JAZZ). These stocks are Duke Realty Corporation (NYSE:DRE), Westinghouse Air Brake Technologies Corp (NYSE:WAB), LINE Corporation (NYSE:LN), and ASE Technology Holding Co., Ltd. (NYSE:ASX). This group of stocks' market valuations are similar to JAZZ's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DRE,16,343282,-6 WAB,18,600559,4 LN,5,127221,1 ASX,7,202861,-1 Average,11.5,318481,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $318 million. That figure was $1.01 billion in JAZZ's case. Westinghouse Air Brake Technologies Corp (NYSE:WAB) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None. This article was originally published at Insider Monkey.

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