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Teva Pharmaceutical Industries Limited (TEVA) Fell Out Of Favor With Hedge Funds

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After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Teva Pharmaceutical Industries Limited (NYSE:TEVA).

Is Teva Pharmaceutical Industries Limited (NYSE:TEVA) the right investment to pursue these days? Prominent investors were turning less bullish. The number of long hedge fund positions were cut by 2 in recent months. Teva Pharmaceutical Industries Limited (NYSE:TEVA) was in 22 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 81. Our calculations also showed that TEVA isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To most traders, hedge funds are viewed as unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our experts hone in on the bigwigs of this club, about 850 funds. These investment experts preside over the majority of the hedge fund industry's total asset base, and by following their matchless picks, Insider Monkey has formulated a number of investment strategies that have historically outpaced the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Kamran Moghtaderi of Eversept 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 EV 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 take a peek at the recent hedge fund action surrounding Teva Pharmaceutical Industries Limited (NYSE:TEVA).

Do Hedge Funds Think TEVA Is A Good Stock To Buy Now?

At the end of June, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TEVA over the last 24 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Berkshire Hathaway was the largest shareholder of Teva Pharmaceutical Industries Limited (NYSE:TEVA), with a stake worth $423.6 million reported as of the end of June. Trailing Berkshire Hathaway was Abrams Capital Management, which amassed a stake valued at $238.1 million. Miller Value Partners, Camber Capital Management, and Eversept Partners 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 Abrams Capital Management allocated the biggest weight to Teva Pharmaceutical Industries Limited (NYSE:TEVA), around 5.29% of its 13F portfolio. Eversept Partners is also relatively very bullish on the stock, earmarking 2.95 percent of its 13F equity portfolio to TEVA.

Because Teva Pharmaceutical Industries Limited (NYSE:TEVA) has experienced bearish sentiment from hedge fund managers, it's safe to say that there exists a select few hedge funds who were dropping their entire stakes by the end of the second quarter. Intriguingly, Steve Cohen's Point72 Asset Management sold off the biggest position of the "upper crust" of funds monitored by Insider Monkey, worth about $18.1 million in stock, and Michael Castor's Sio Capital was right behind this move, as the fund sold off about $6.2 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds by the end of the second quarter.

Let's check out hedge fund activity in other stocks similar to Teva Pharmaceutical Industries Limited (NYSE:TEVA). These stocks are Regency Centers Corp (NASDAQ:REG), Norwegian Cruise Line Holdings Ltd (NYSE:NCLH), Five Below Inc (NASDAQ:FIVE), LPL Financial Holdings Inc (NASDAQ:LPLA), Gaming and Leisure Properties Inc (NASDAQ:GLPI), Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), and Cleveland-Cliffs Inc (NYSE:CLF). This group of stocks' market caps resemble TEVA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position REG,25,192591,8 NCLH,43,606617,9 FIVE,42,783248,-1 LPLA,48,1500930,10 GLPI,27,515879,-1 JAZZ,34,1493732,-3 CLF,44,1111037,8 Average,37.6,886291,4.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $886 million. That figure was $947 million in TEVA's case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand Regency Centers Corp (NASDAQ:REG) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Teva Pharmaceutical Industries Limited (NYSE:TEVA) is even less popular than REG. Our overall hedge fund sentiment score for TEVA is 11.1. 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. Hedge funds dodged a bullet by taking a bearish stance towards TEVA. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd but managed to beat the market again by 1.6 percentage points. Unfortunately TEVA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); TEVA investors were disappointed as the stock returned 2.3% since the end of the second quarter (through 10/22) 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 since 2019.

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