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Were Hedge Funds Right About Piling Into Moderna (MRNA)?

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·5 min read
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The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Moderna, Inc. (NASDAQ:MRNA).

Moderna, Inc. (NASDAQ:MRNA) investors should be aware of an increase in support from the world's most elite money managers lately. Moderna, Inc. (NASDAQ:MRNA) was in 41 hedge funds' portfolios at the end of December. The all time high for this statistic was previously 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MRNA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Paul Marshall Marshall Wace
Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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. With all of this in mind let's view the new hedge fund action encompassing Moderna, Inc. (NASDAQ:MRNA).

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

At the end of December, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 28% from the third quarter of 2020. By comparison, 12 hedge funds held shares or bullish call options in MRNA a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Moderna, Inc. (NASDAQ:MRNA) was held by Theleme Partners, which reported holding $558.3 million worth of stock at the end of December. It was followed by D E Shaw with a $324.9 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Theleme Partners allocated the biggest weight to Moderna, Inc. (NASDAQ:MRNA), around 18.33% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, dishing out 2.32 percent of its 13F equity portfolio to MRNA.

Consequently, key hedge funds were leading the bulls' herd. Renaissance Technologies, established the largest position in Moderna, Inc. (NASDAQ:MRNA). Renaissance Technologies had $183.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $26.4 million position during the quarter. The following funds were also among the new MRNA investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Doug Silverman and Alexander Klabin's Senator Investment Group, and Ryan Caldwell's Chiron Investment Management.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Moderna, Inc. (NASDAQ:MRNA) but similarly valued. We will take a look at American Electric Power Company, Inc. (NASDAQ:AEP), Veeva Systems Inc (NYSE:VEEV), Exelon Corporation (NASDAQ:EXC), Dow Inc. (NYSE:DOW), Carvana Co. (NYSE:CVNA), Baxter International Inc. (NYSE:BAX), and CNOOC Limited (NYSE:CEO). This group of stocks' market caps are similar to MRNA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AEP,32,331817,2 VEEV,36,884354,-2 EXC,30,729348,1 DOW,47,711306,5 CVNA,63,7071672,10 BAX,42,2801959,-9 CEO,13,197301,-1 Average,37.6,1818251,0.9 [/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 $1818 million. That figure was $1479 million in MRNA's case. Carvana Co. (NYSE:CVNA) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 13 bullish hedge fund positions. Moderna, Inc. (NASDAQ:MRNA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRNA is 68. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on MRNA as the stock returned 71.2% since the end of Q4 (through 4/30) 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.

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