Do Hedge Funds Love AmerisourceBergen Corporation (ABC)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of AmerisourceBergen Corporation (NYSE:ABC).

AmerisourceBergen Corporation (NYSE:ABC) has seen a decrease in hedge fund interest recently. AmerisourceBergen Corporation (NYSE:ABC) was in 43 hedge funds’ portfolios at the end of March. 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 Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Larry Robbins of Glenview Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the key 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 first quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the fourth quarter of 2020. On the other hand, there were a total of 41 hedge funds with a bullish position in ABC a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

The largest stake in AmerisourceBergen Corporation (NYSE:ABC) was held by Glenview Capital, which reported holding $214.2 million worth of stock at the end of December. It was followed by AQR Capital Management with a $169 million position. Other investors bullish on the company included Suvretta Capital Management, D E Shaw, and Antipodes Partners. In terms of the portfolio weights assigned to each position HealthInvest Partners AB allocated the biggest weight to AmerisourceBergen Corporation (NYSE:ABC), around 5.17% of its 13F portfolio. MD Sass is also relatively very bullish on the stock, designating 4.07 percent of its 13F equity portfolio to ABC.

Judging by the fact that AmerisourceBergen Corporation (NYSE:ABC) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that decided to sell off their positions entirely heading into Q2. Intriguingly, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors cut the biggest position of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $15.7 million in stock, and Michael Castor’s Sio Capital was right behind this move, as the fund dropped about $12.5 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds heading into Q2.

Let’s now take a look at hedge fund activity in other stocks similar to AmerisourceBergen Corporation (NYSE:ABC). We will take a look at ZTO Express (Cayman) Inc. (NYSE:ZTO), New Oriental Education & Technology Group Inc. (NYSE:EDU), Kansas City Southern (NYSE:KSU), Nucor Corporation (NYSE:NUE), Franco-Nevada Corporation (NYSE:FNV), Fortive Corporation (NYSE:FTV), and Hartford Financial Services Group Inc (NYSE:HIG). This group of stocks’ market valuations match ABC’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1313 million. That figure was $1177 million in ABC’s case. Hartford Financial Services Group Inc (NYSE:HIG) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 15 bullish hedge fund positions. AmerisourceBergen Corporation (NYSE:ABC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ABC is 61.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately ABC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ABC were disappointed as the stock returned -2.7% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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