At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) makes for a good investment right now.
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) has experienced a decrease in support from the world’s most elite money managers of late. Our calculations also showed that ALNY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Hedge fund sentiment hit its all time high at the end of Q2. A few hedge funds cashed out of the stock too early.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Lee Ainslie of Maverick Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the recent hedge fund action regarding Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).
How have hedgies been trading Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)?
At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in ALNY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Maverick Capital held the most valuable stake in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), which was worth $259.2 million at the end of the third quarter. On the second spot was Farallon Capital which amassed $120.6 million worth of shares. Alkeon Capital Management, 12 West Capital Management, and Slate Path Capital 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 Casdin Capital allocated the biggest weight to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), around 4.83% of its portfolio. Maverick Capital is also relatively very bullish on the stock, setting aside 3.81 percent of its 13F equity portfolio to ALNY.
Judging by the fact that Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) has faced falling interest from the smart money, we can see that there exists a select few funds that slashed their full holdings heading into Q4. At the top of the heap, Arthur B Cohen and Joseph Healey’s Healthcor Management cut the largest investment of the 750 funds monitored by Insider Monkey, totaling an estimated $34 million in stock. Steve Cohen’s fund, Point72 Asset Management, also cut its stock, about $28.9 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 6 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) but similarly valued. We will take a look at NICE Ltd. (NASDAQ:NICE), Melco Resorts & Entertainment Limited (NASDAQ:MLCO), Teck Resources Ltd (NYSE:TECK), and RPM International Inc. (NYSE:RPM). This group of stocks’ market values are similar to ALNY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NICE | 16 | 375883 | -3 |
| MLCO | 24 | 533835 | 2 |
| TECK | 17 | 575085 | -6 |
| RPM | 32 | 410079 | 7 |
| Average | 22.25 | 473721 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $474 million. That figure was $780 million in ALNY’s case. RPM International Inc. (NYSE:RPM) is the most popular stock in this table. On the other hand NICE Ltd. (NASDAQ:NICE) is the least popular one with only 16 bullish hedge fund positions. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on ALNY as the stock returned 45.7% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
