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In this article you are going to find out whether hedge funds think Teva Pharmaceutical Industries Limited (NYSE:TEVA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is TEVA a good stock to buy? Teva Pharmaceutical Industries Limited (NYSE:TEVA) shareholders have witnessed a decrease in hedge fund sentiment lately. Teva Pharmaceutical Industries Limited (NYSE:TEVA) was in 24 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 81. There were 26 hedge funds in our database with TEVA positions at the end of the fourth quarter. Our calculations also showed that TEVA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To the average investor there are many signals investors employ to grade publicly traded companies. Two of the less utilized signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top money managers can beat their index-focused peers by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Bill Miller of Miller Value Partners
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Do Hedge Funds Think TEVA Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TEVA over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Teva Pharmaceutical Industries Limited (NYSE:TEVA) was held by Berkshire Hathaway, which reported holding $493.8 million worth of stock at the end of December. It was followed by Abrams Capital Management with a $277.5 million position. Other investors bullish on the company included Miller Value Partners, Camber Capital Management, and Eversept Partners. In terms of the portfolio weights assigned to each position Abrams Capital Management allocated the biggest weight to Teva Pharmaceutical Industries Limited (NYSE:TEVA), around 6.25% of its 13F portfolio. Eversept Partners is also relatively very bullish on the stock, earmarking 3.98 percent of its 13F equity portfolio to TEVA.
Since Teva Pharmaceutical Industries Limited (NYSE:TEVA) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few fund managers who were dropping their full holdings in the first quarter. At the top of the heap, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners cut the largest investment of the 750 funds watched by Insider Monkey, comprising about $22.1 million in stock. OrbiMed Advisors, also sold off its stock, about $18.7 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds in the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Teva Pharmaceutical Industries Limited (NYSE:TEVA) but similarly valued. These stocks are InterContinental Hotels Group PLC (NYSE:IHG), XPO Logistics Inc (NYSE:XPO), Snap-on Incorporated (NYSE:SNA), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), CenterPoint Energy, Inc. (NYSE:CNP), Shaw Communications Inc (NYSE:SJR), and Nuance Communications Inc. (NASDAQ:NUAN). This group of stocks' market values are closest to TEVA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IHG,8,19947,1 XPO,40,2685320,0 SNA,18,431948,-8 CHRW,23,359592,-6 CNP,25,370742,-5 SJR,21,384820,2 NUAN,57,4129595,-3 Average,27.4,1197423,-2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $1197 million. That figure was $1119 million in TEVA's case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 8 bullish hedge fund positions. Teva Pharmaceutical Industries Limited (NYSE:TEVA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TEVA is 28.2. 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 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately TEVA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TEVA investors were disappointed as the stock returned -25.4% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.