Amgen, Inc. (AMGN): Are Hedge Funds Right About This Stock?

The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Amgen, Inc. (NASDAQ:AMGN) and find out how it is affected by hedge funds’ moves.

Amgen, Inc. (NASDAQ:AMGN) was in 73 hedge funds’ portfolios at the end of the third quarter of 2015. AMGN shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 68 hedge funds in our database with AMGN holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as British American Tobacco PLC (ADR) (NYSEAMEX:BTI), TOTAL S.A. (ADR) (NYSE:TOT), and BP plc (ADR) (NYSE:BP) to gather more data points.

According to most stock holders, hedge funds are perceived as unimportant, old financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, We hone in on the leaders of this club, approximately 700 funds. It is estimated that this group of investors administer most of the hedge fund industry’s total capital, and by watching their matchless stock picks, Insider Monkey has brought to light a few investment strategies that have historically outpaced the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, we’re going to take a look at the new action regarding Amgen, Inc. (NASDAQ:AMGN).

How are hedge funds trading Amgen, Inc. (NASDAQ:AMGN)?

At the Q3’s end, a total of 73 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Dan Loeb’s Third Point has the number one position in Amgen, Inc. (NASDAQ:AMGN), worth close to $1.36 billion, accounting for 12.9% of its total 13F portfolio. Sitting at the No. 2 spot is OrbiMed Advisors, managed by Samuel Isaly, which holds a $416.8 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and Jim Simons’s Renaissance Technologies.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. OZ Management, managed by Daniel S. Och, created the most outsized call position in Amgen, Inc. (NASDAQ:AMGN). OZ Management had $70.3 million invested in the company at the end of the quarter. John A. Levin’s Levin Capital Strategies also made a $38.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Andreas Halvorsen’s Viking Global, Daniel S. Och’s OZ Management, and David Lamond’s Lamond Capital Partners.

Let’s go over hedge fund activity in other stocks similar to Amgen, Inc. (NASDAQ:AMGN). We will take a look at British American Tobacco PLC (ADR) (NYSEAMEX:BTI), TOTAL S.A. (ADR) (NYSE:TOT), BP plc (ADR) (NYSE:BP), and Mastercard Inc (NYSE:MA). This group of stocks’ market valuations are similar to AMGN’s market valuation.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $2.02 billion. That figure was $4.47 billion in AMGN’s case. Mastercard Inc (NYSE:MA) is the most popular stock in this table, while British American Tobacco PLC (ADR) (NYSEAMEX:BTI) is the least popular one with only 15 bullish hedge fund positions. Amgen, Inc. (NASDAQ:AMGN) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MA might be a better candidate to consider a long position.