Do Hedge Funds Love AbbVie Inc (ABBV)?

After years of low interest rates, retail investors continue to starve for income while awaiting higher yields. The long-lasting low interest rate environment has forced most investors to channel their capital towards staples, utilities, telecom and REITs in the past several years, which has driven up their price-to-earnings ratios to quite high levels. Even though some investors might still hold onto their cash holdings in anticipation of higher yields, they might have to wait quite a while with interest rates being expected to remain at low levels for the foreseeable future. Nonetheless, retail investors might still find safe stocks with dividend yields above 2% that trade at relatively attractive price-to-earnings ratios. At Insider Monkey, we go through more than 700 filings submitted by top investment firms every quarter and gather data that gives us access to a wealth of collective knowledge based on these firm’s portfolio holdings. Therefore, this article will use that wealth of knowledge to determine whether or not AbbVie Inc (NYSE:ABBV), a company that offers a dividend yield above 4% and trades at attractive P/E multiples, makes for a good investment right now.

AbbVie Inc (NYSE:ABBV) has experienced a decrease in activity from the world’s largest hedge funds of late. AbbVie was in 70 hedge funds’ portfolios at the end of December. There were 78 hedge funds in our database with ABBV positions at the end of the previous quarter. At the end of this article we will also compare ABBV to other stocks including BP plc (ADR) (NYSE:BP), SAP AG (ADR) (NYSE:SAP), and Celgene Corporation (NASDAQ:CELG) to get a better sense of its popularity.

Today there are numerous gauges investors use to size up stocks. Two of the most innovative gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the market by a solid margin (see the details here).

AbbVie Inc (NYSE:ABBV) is a research-based biopharmaceutical company that focuses on the development of therapies for the treatment of complex and serious diseases. To be more detailed, the company’s portfolio of products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, which includes blood cancers; virology, which includes hepatitis C (HCV) and human immunodeficiency virus (HIV), to name just a few. AbbVie’s wordwide net revenues reached $22.86 billion in 2015, up from $19.96 billion generated in 2014 and $18.79 billion in 2013. The top-line growth was mainly driven by the sustained strength of the company’s primary drug HUMIRA, which accounted for approximately 61% of total net revenue in 2015, the launch of AbbVie’s interferon-free HCV treatment, and revenue growth in other important products. It should be noted that AbbVie pays out an annual dividend of $2.28 per share, which denotes a current dividend yield of 4.06%. At the same time, the stock is priced at only 9.40-times expected earnings, significantly below the forward P/E multiple of 16.5 for the Drug Retail industry.

Now, let’s go over the latest action encompassing AbbVie Inc (NYSE:ABBV), as well as discuss what some hedge fund managers had to say about this company.