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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Regeneron Pharmaceuticals Inc (NASDAQ:REGN) based on that data.
Is REGN a good stock to buy? Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was in 39 hedge funds' portfolios at the end of March. The all time high for this statistic is 49. REGN investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. There were 46 hedge funds in our database with REGN holdings at the end of December. Our calculations also showed that REGN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's analyze the new hedge fund action regarding Regeneron Pharmaceuticals Inc (NASDAQ:REGN).
Do Hedge Funds Think REGN Is A Good Stock To Buy Now?
At Q1's end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. By comparison, 42 hedge funds held shares or bullish call options in REGN a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, ARK Investment Management, managed by Catherine D. Wood, holds the biggest position in Regeneron Pharmaceuticals Inc (NASDAQ:REGN). ARK Investment Management has a $576.7 million position in the stock, comprising 1.1% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $171.2 million call position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish contain Cliff Asness's AQR Capital Management, Israel Englander's Millennium Management and Michael Rockefeller and KarláKroeker's Woodline Partners. In terms of the portfolio weights assigned to each position Copernicus Capital Management allocated the biggest weight to Regeneron Pharmaceuticals Inc (NASDAQ:REGN), around 11.47% of its 13F portfolio. Tri Locum Partners is also relatively very bullish on the stock, earmarking 7.59 percent of its 13F equity portfolio to REGN.
Judging by the fact that Regeneron Pharmaceuticals Inc (NASDAQ:REGN) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that decided to sell off their full holdings by the end of the first quarter. At the top of the heap, Joseph Edelman's Perceptive Advisors said goodbye to the largest position of the "upper crust" of funds monitored by Insider Monkey, worth close to $26.7 million in stock. Michael Kharitonov and Jon David McAuliffe's fund, Voleon Capital, also cut its stock, about $20 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 7 funds by the end of the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Regeneron Pharmaceuticals Inc (NASDAQ:REGN). We will take a look at Canadian Pacific Railway Limited (NYSE:CP), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), The Kraft Heinz Company (NASDAQ:KHC), Relx PLC (NYSE:RELX), Dollar General Corp. (NYSE:DG), Keurig Dr Pepper Inc. (NASDAQ:KDP), and Newmont Corporation (NYSE:NEM). This group of stocks' market caps are closest to REGN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CP,33,5908185,9 SMFG,14,88068,4 KHC,33,13334618,-3 RELX,4,85198,-4 DG,52,2341556,-5 KDP,30,934902,1 NEM,43,994802,-7 Average,29.9,3383904,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $3384 million. That figure was $1308 million in REGN's case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 4 bullish hedge fund positions. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for REGN is 58.3. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on REGN as the stock returned 16.4% since the end of Q1 (through 6/25) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.