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 Takeda Pharmaceutical Company Limited (NYSE:TAK) based on that data.
Is Takeda Pharmaceutical Company Limited (NYSE:TAK) the right pick for your portfolio? Hedge funds were in a bullish mood. The number of long hedge fund positions went up by 1 lately. Takeda Pharmaceutical Company Limited (NYSE:TAK) was in 19 hedge funds' portfolios at the end of March. The all time high for this statistic is 35. Our calculations also showed that TAK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 18 hedge funds in our database with TAK positions at the end of the fourth quarter.
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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Thomas Claugus of GMT Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 gander at the key hedge fund action regarding Takeda Pharmaceutical Company Limited (NYSE:TAK).
Do Hedge Funds Think TAK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in TAK a year ago. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Catherine D. Wood's ARK Investment Management has the biggest position in Takeda Pharmaceutical Company Limited (NYSE:TAK), worth close to $341.8 million, comprising 0.7% of its total 13F portfolio. Coming in second is Larry Robbins of Glenview Capital, with a $294.1 million position; the fund has 5% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise John Paulson's Paulson & Co, Renaissance Technologies and Thomas E. Claugus's GMT Capital. In terms of the portfolio weights assigned to each position Glenview Capital allocated the biggest weight to Takeda Pharmaceutical Company Limited (NYSE:TAK), around 4.98% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, dishing out 3.31 percent of its 13F equity portfolio to TAK.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, initiated the biggest position in Takeda Pharmaceutical Company Limited (NYSE:TAK). LMR Partners had $3.2 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $2.5 million investment in the stock during the quarter. The other funds with brand new TAK positions are Israel Englander's Millennium Management, John Overdeck and David Siegel's Two Sigma Advisors, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's check out hedge fund activity in other stocks similar to Takeda Pharmaceutical Company Limited (NYSE:TAK). These stocks are Bank of Montreal (NYSE:BMO), Analog Devices, Inc. (NASDAQ:ADI), Illumina, Inc. (NASDAQ:ILMN), The Progressive Corporation (NYSE:PGR), Moody's Corporation (NYSE:MCO), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), and NXP Semiconductors NV (NASDAQ:NXPI). This group of stocks' market caps resemble TAK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMO,15,204401,4 ADI,50,4860676,-8 ILMN,52,1595824,7 PGR,45,1211037,-3 MCO,55,13726876,-4 VRTX,68,3711731,15 NXPI,53,1718673,-13 Average,48.3,3861317,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.3 hedge funds with bullish positions and the average amount invested in these stocks was $3861 million. That figure was $860 million in TAK's case. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is the most popular stock in this table. On the other hand Bank of Montreal (NYSE:BMO) is the least popular one with only 15 bullish hedge fund positions. Takeda Pharmaceutical Company Limited (NYSE:TAK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TAK is 26.1. 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. 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 TAK wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TAK investors were disappointed as the stock returned -6.8% 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.