We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards AmerisourceBergen Corporation (NYSE:ABC) and determine whether hedge funds skillfully traded this stock.
Is AmerisourceBergen Corporation (NYSE:ABC) a bargain? Investors who are in the know were taking an optimistic view. The number of long hedge fund bets advanced by 1 lately. AmerisourceBergen Corporation (NYSE:ABC) was in 44 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 47. Our calculations also showed that ABC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 43 hedge funds in our database with ABC holdings at the end of June.
Aaron Cowen of Suvretta Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind we’re going to take a gander at the new hedge fund action encompassing AmerisourceBergen Corporation (NYSE:ABC).
Do Hedge Funds Think ABC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ABC over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in AmerisourceBergen Corporation (NYSE:ABC) was held by Glenview Capital, which reported holding $225.3 million worth of stock at the end of September. It was followed by Suvretta Capital Management with a $147.5 million position. Other investors bullish on the company included Citadel Investment Group, Healthcor Management LP, and AQR Capital Management. In terms of the portfolio weights assigned to each position Healthcor Management LP allocated the biggest weight to AmerisourceBergen Corporation (NYSE:ABC), around 4.62% of its 13F portfolio. Glenview Capital is also relatively very bullish on the stock, dishing out 4.13 percent of its 13F equity portfolio to ABC.
As one would reasonably expect, specific money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, initiated the biggest position in AmerisourceBergen Corporation (NYSE:ABC). D E Shaw had $56.4 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $24.6 million investment in the stock during the quarter. The other funds with brand new ABC positions are Brian Ashford-Russell and Tim Woolley’s Polar Capital, Anand Parekh’s Alyeska Investment Group, and Zach Schreiber’s Point State Capital.
Let’s go over hedge fund activity in other stocks similar to AmerisourceBergen Corporation (NYSE:ABC). We will take a look at Cheniere Energy, Inc. (NYSE:LNG), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), Expedia Group Inc (NASDAQ:EXPE), Sirius XM Holdings Inc (NASDAQ:SIRI), Kansas City Southern (NYSE:KSU), Upstart Holdings, Inc. (NASDAQ:UPST), and Yum China Holdings, Inc. (NYSE:YUMC). This group of stocks’ market valuations are closest to ABC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LNG | 49 | 3103167 | 0 |
| HZNP | 60 | 4573780 | 4 |
| EXPE | 78 | 6470916 | -9 |
| SIRI | 27 | 470025 | 1 |
| KSU | 59 | 4323096 | -2 |
| UPST | 23 | 5076367 | 2 |
| YUMC | 30 | 832648 | -2 |
| Average | 46.6 | 3550000 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.6 hedge funds with bullish positions and the average amount invested in these stocks was $3550 million. That figure was $1215 million in ABC’s case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand Upstart Holdings, Inc. (NASDAQ:UPST) is the least popular one with only 23 bullish hedge fund positions. AmerisourceBergen Corporation (NYSE:ABC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ABC is 53.2. 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 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on ABC as the stock returned 14.4% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
