In this article we will check out the progression of hedge fund sentiment towards Regeneron Pharmaceuticals Inc (NASDAQ:REGN) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Regeneron Pharmaceuticals Inc (NASDAQ:REGN) a good investment now? Money managers were becoming more confident. The number of long hedge fund positions moved up by 7 in recent months. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was in 49 hedge funds' portfolios at the end of June. The all time high for this statistics is 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that REGN isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
Steven Cohen of Point72 Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we're going to take a look at the recent hedge fund action encompassing Regeneron Pharmaceuticals Inc (NASDAQ:REGN).
Hedge fund activity in Regeneron Pharmaceuticals Inc (NASDAQ:REGN)
Heading into the third quarter of 2020, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in REGN over the last 20 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was held by Renaissance Technologies, which reported holding $555.1 million worth of stock at the end of September. It was followed by AQR Capital Management with a $222.8 million position. Other investors bullish on the company included Citadel Investment Group, PEAK6 Capital Management, and Polar Capital. In terms of the portfolio weights assigned to each position Voleon Capital allocated the biggest weight to Regeneron Pharmaceuticals Inc (NASDAQ:REGN), around 10.85% of its 13F portfolio. Bridger Management is also relatively very bullish on the stock, dishing out 3.24 percent of its 13F equity portfolio to REGN.
Consequently, specific money managers have jumped into Regeneron Pharmaceuticals Inc (NASDAQ:REGN) headfirst. Holocene Advisors, managed by Brandon Haley, assembled the most valuable position in Regeneron Pharmaceuticals Inc (NASDAQ:REGN). Holocene Advisors had $76.7 million invested in the company at the end of the quarter. Arthur B Cohen and Joseph Healey's Healthcor Management LP also initiated a $35.3 million position during the quarter. The following funds were also among the new REGN investors: Steve Cohen's Point72 Asset Management, Anand Parekh's Alyeska Investment Group, and Michael Kharitonov and Jon David McAuliffe's Voleon Capital.
Let's also examine hedge fund activity in other stocks similar to Regeneron Pharmaceuticals Inc (NASDAQ:REGN). We will take a look at Canadian National Railway Company (NYSE:CNI), Colgate-Palmolive Company (NYSE:CL), China Petroleum & Chemical Corp (NYSE:SNP), Equinix, Inc. (REIT) (NASDAQ:EQIX), Advanced Micro Devices, Inc. (NASDAQ:AMD), Enbridge Inc (NYSE:ENB), and The TJX Companies, Inc. (NYSE:TJX). This group of stocks' market values are similar to REGN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNI,28,2050472,2 CL,50,1699344,-3 SNP,10,168521,1 EQIX,49,2314147,-6 AMD,51,2569197,-11 ENB,28,379932,3 TJX,72,2347508,3 Average,41.1,1647017,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.1 hedge funds with bullish positions and the average amount invested in these stocks was $1647 million. That figure was $1604 million in REGN's case. The TJX Companies, Inc. (NYSE:TJX) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 10 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 71.5. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately REGN wasn't nearly as popular as these 10 stocks and hedge funds that were betting on REGN were disappointed as the stock returned -7% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.