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We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of December 31st. In this article, we look at what those funds think of Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) based on that data.
Is JAZZ stock a buy? Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) investors should be aware of an increase in hedge fund sentiment lately. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) was in 29 hedge funds' portfolios at the end of December. The all time high for this statistic is 49. There were 28 hedge funds in our database with JAZZ positions at the end of the third quarter. Our calculations also showed that JAZZ isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Alex Denner of Sarissa Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's take a look at the new hedge fund action encompassing Jazz Pharmaceuticals Plc (NASDAQ:JAZZ).
Do Hedge Funds Think JAZZ Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in JAZZ over the last 22 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 Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), which was worth $511.5 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $165.4 million worth of shares. Citadel Investment Group, Sarissa Capital Management, and Holocene Advisors 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 Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), around 15.63% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, dishing out 5.56 percent of its 13F equity portfolio to JAZZ.
Consequently, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in Jazz Pharmaceuticals Plc (NASDAQ:JAZZ). Balyasny Asset Management had $35.7 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley's Polar Capital also made a $12.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith's Laurion Capital Management, Lee Ainslie's Maverick Capital, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's go over hedge fund activity in other stocks similar to Jazz Pharmaceuticals Plc (NASDAQ:JAZZ). We will take a look at Dropbox, Inc. (NASDAQ:DBX), The Interpublic Group of Companies Inc (NYSE:IPG), NRG Energy Inc (NYSE:NRG), Bunge Limited (NYSE:BG), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), RH (NYSE:RH), and Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF). All of these stocks' market caps match JAZZ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DBX,43,962972,0 IPG,38,581603,7 NRG,31,1465420,-1 BG,51,936635,10 RARE,26,609331,6 RH,42,1925993,2 KOF,6,384456,0 Average,33.9,980916,3.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $981 million. That figure was $1339 million in JAZZ's case. Bunge Limited (NYSE:BG) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 6 bullish hedge fund positions. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JAZZ is 49.3. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately JAZZ wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); JAZZ investors were disappointed as the stock returned -1.7% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.