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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Novo Nordisk A/S (NYSE:NVO), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is NVO a good stock to buy now? Novo Nordisk A/S (NYSE:NVO) investors should pay attention to a decrease in activity from the world's largest hedge funds recently. Novo Nordisk A/S (NYSE:NVO) was in 22 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. There were 24 hedge funds in our database with NVO holdings at the end of June. Our calculations also showed that NVO isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
At the moment there are numerous formulas stock market investors use to appraise publicly traded companies. Two of the most underrated formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce the S&P 500 by a superb margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 we're going to check out the key hedge fund action regarding Novo Nordisk A/S (NYSE:NVO).
Do Hedge Funds Think NVO Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NVO over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Novo Nordisk A/S (NYSE:NVO), worth close to $1.9525 billion, corresponding to 1.9% of its total 13F portfolio. The second most bullish fund manager is Fisher Asset Management, managed by Ken Fisher, which holds a $1.0903 billion position; 1% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Tom Gayner's Markel Gayner Asset Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Novo Nordisk A/S (NYSE:NVO), around 1.95% of its 13F portfolio. Markel Gayner Asset Management is also relatively very bullish on the stock, designating 1.27 percent of its 13F equity portfolio to NVO.
Due to the fact that Novo Nordisk A/S (NYSE:NVO) has witnessed a decline in interest from the entirety of the hedge funds we track, it's easy to see that there lies a certain "tier" of funds who were dropping their entire stakes last quarter. Interestingly, Doron Breen and Mori Arkin's Sphera Global Healthcare Fund dropped the biggest position of the 750 funds followed by Insider Monkey, totaling close to $26.2 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund said goodbye to about $23.8 million worth. These transactions are important to note, as total hedge fund interest fell by 2 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Novo Nordisk A/S (NYSE:NVO). These stocks are The Unilever Group (NYSE:UL), Costco Wholesale Corporation (NASDAQ:COST), ASML Holding N.V. (NASDAQ:ASML), AbbVie Inc (NYSE:ABBV), Danaher Corporation (NYSE:DHR), Amgen, Inc. (NASDAQ:AMGN), and Broadcom Inc (NASDAQ:AVGO). This group of stocks' market valuations resemble NVO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UL,13,159946,0 COST,73,3850375,12 ASML,23,2057327,-2 ABBV,82,6293077,-7 DHR,75,4702628,-1 AMGN,45,1220712,-6 AVGO,59,2374856,0 Average,52.9,2951274,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 52.9 hedge funds with bullish positions and the average amount invested in these stocks was $2951 million. That figure was $3294 million in NVO's case. AbbVie Inc (NYSE:ABBV) 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. Our overall hedge fund sentiment score for NVO is 35.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately NVO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NVO investors were disappointed as the stock returned -1% since the end of September (through 12/14) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.