Is AstraZeneca plc (ADR) (NYSE:AZN) worth your attention right now? The smart money is becoming less confident. The number of long hedge fund bets fell by 2 lately. Interestingly, the company had its estimates cut at Leerink Swann this morning, through next year. Shares are down slightly since the beginning of trading, but it’s also important to pay attention to what hedgies and insiders have been doing in the past few months.
In the eyes of most investors, hedge funds are seen as unimportant, outdated financial tools of yesteryear. While there are greater than 8000 funds trading at present, we choose to focus on the moguls of this club, about 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total capital, and by monitoring their highest performing picks, we have found a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as important, positive insider trading sentiment is a second way to parse down the investments you’re interested in. There are plenty of reasons for a bullish insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this method if “monkeys” understand what to do (learn more here).
With all of this in mind, we’re going to take a gander at the latest action encompassing AstraZeneca plc (ADR) (NYSE:AZN).
How are hedge funds trading AstraZeneca plc (ADR) (NYSE:AZN)?
Heading into 2013, a total of 11 of the hedge funds we track were long in this stock, a change of -15% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings significantly.
Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in AstraZeneca plc (ADR) (NYSE:AZN). Renaissance Technologies has a $118.3 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Two Sigma Advisors, managed by John Overdeck and David Siegel, which held a $14.5 million position; 0.4% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Michael Messner’s Seminole Capital (Investment Mgmt) and David Dreman’s Dreman Value Management.
Seeing as AstraZeneca plc (ADR) (NYSE:AZN) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of fund managers that elected to cut their entire stakes heading into 2013. At the top of the heap, Malcolm Fairbairn’s Ascend Capital sold off the biggest stake of the “upper crust” of funds we track, comprising about $8.4 million in stock.. Jacob Gottlieb’s fund, Visium Asset Management, also sold off its stock, about $2.2 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds heading into 2013.
Insider trading activity in AstraZeneca plc (ADR) (NYSE:AZN)
Bullish insider trading is best served when the company in question has experienced transactions within the past half-year. Over the latest half-year time period, AstraZeneca plc (ADR) (NYSE:AZN) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to AstraZeneca plc (ADR) (NYSE:AZN). These stocks are Merck & Co., Inc. (NYSE:MRK), GlaxoSmithKline plc (ADR) (NYSE:GSK), Bristol Myers Squibb Co. (NYSE:BMY), AbbVie Inc (NYSE:ABBV), and Eli Lilly & Co. (NYSE:LLY). This group of stocks belong to the drug manufacturers – major industry and their market caps are closest to AZN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Merck & Co., Inc. (NYSE:MRK) | 58 | 0 | 3 |
| GlaxoSmithKline plc (ADR) (NYSE:GSK) | 16 | 0 | 0 |
| Bristol Myers Squibb Co. (NYSE:BMY) | 37 | 0 | 13 |
| AbbVie Inc (NYSE:ABBV) | 16 | 2 | 2 |
| Eli Lilly & Co. (NYSE:LLY) | 34 | 0 | 5 |
With the returns shown by the aforementioned research, everyday investors must always watch hedge fund and insider trading sentiment, and AstraZeneca plc (ADR) (NYSE:AZN) is no exception.
