Do Hedge Funds and Insiders Love Allergan, Inc. (AGN)?

Allergan, Inc. (NYSE:AGN) was in 31 hedge funds’ portfolio at the end of the first quarter of 2013. AGN has seen a decrease in hedge fund interest in recent months. There were 31 hedge funds in our database with AGN holdings at the end of the previous quarter.

In the 21st century investor’s toolkit, there are plenty of methods shareholders can use to monitor the equity markets. Some of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can outperform the market by a superb amount (see just how much).

Equally as important, bullish insider trading activity is a second way to break down the investments you’re interested in. Obviously, there are a number of stimuli for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a gander at the latest action surrounding Allergan, Inc. (NYSE:AGN).

What does the smart money think about Allergan, Inc. (NYSE:AGN)?

At the end of the first quarter, a total of 31 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Robert Pohly’s Samlyn Capital had the largest position in Allergan, Inc. (NYSE:AGN), worth close to $77.6 million, accounting for 2.4% of its total 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $69.8 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Roberto Mignone’s Bridger Management, Phill Gross and Robert Atchinson’s Adage Capital Management and D. E. Shaw’s D E Shaw.

Seeing as Allergan, Inc. (NYSE:AGN) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of fund managers that elected to cut their positions entirely at the end of the first quarter. Intriguingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP dumped the largest investment of the “upper crust” of funds we key on, totaling close to $91.7 million in stock.. SAC Subsidiary’s fund, CR Intrinsic Investors, also cut its stock, about $4.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading Allergan, Inc. (NYSE:AGN)?

Bullish insider trading is best served when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time frame, Allergan, Inc. (NYSE:AGN) has experienced zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Allergan, Inc. (NYSE:AGN). These stocks are Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY), Pharmacyclics, Inc. (NASDAQ:PCYC), Forest Laboratories, Inc. (NYSE:FRX), Novo Nordisk A/S (ADR) (NYSE:NVO), and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). This group of stocks are in the drug manufacturers – other industry and their market caps are similar to AGN’s market cap.