The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Gilead Sciences, Inc. (NASDAQ:GILD) based on those filings.
Is Gilead Sciences, Inc. (NASDAQ:GILD) a sound investment right now? The smart money is in a pessimistic mood. The number of bullish hedge fund positions fell by 1 in recent months. Overall hedge fund sentiment towards the stock is near its all time low. Our calculations also showed that GILD isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are assumed to be unimportant, old financial tools of the past. While there are over 8000 funds with their doors open at present, Our experts look at the bigwigs of this group, approximately 750 funds. These investment experts manage the lion’s share of all hedge funds’ total capital, and by paying attention to their top stock picks, Insider Monkey has discovered a number of investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the new hedge fund action surrounding Gilead Sciences, Inc. (NASDAQ:GILD).
How have hedgies been trading Gilead Sciences, Inc. (NASDAQ:GILD)?
At Q2’s end, a total of 57 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the first quarter of 2019. On the other hand, there were a total of 57 hedge funds with a bullish position in GILD a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Gilead Sciences, Inc. (NASDAQ:GILD), with a stake worth $860.7 million reported as of the end of March. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $417.8 million. AQR Capital Management, Two Sigma Advisors, and Arrowstreet Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Gilead Sciences, Inc. (NASDAQ:GILD) has faced a decline in interest from hedge fund managers, it’s easy to see that there is a sect of hedgies that decided to sell off their entire stakes by the end of the second quarter. Interestingly, Peter Muller’s PDT Partners cut the biggest investment of all the hedgies watched by Insider Monkey, comprising an estimated $23.5 million in stock, and Mike Masters’s Masters Capital Management was right behind this move, as the fund dropped about $19.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the second quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Gilead Sciences, Inc. (NASDAQ:GILD) but similarly valued. We will take a look at U.S. Bancorp (NYSE:USB), British American Tobacco plc (NYSEAMEX:BTI), Booking Holdings Inc. (NASDAQ:BKNG), and China Petroleum & Chemical Corp (NYSE:SNP). This group of stocks’ market caps are similar to GILD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| USB | 39 | 7777146 | -5 |
| BTI | 9 | 252481 | -6 |
| BKNG | 72 | 5253718 | -5 |
| SNP | 11 | 222276 | -2 |
| Average | 32.75 | 3376405 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $3376 million. That figure was $3863 million in GILD’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSEAMEX:BTI) is the least popular one with only 9 bullish hedge fund positions. Gilead Sciences, Inc. (NASDAQ:GILD) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GILD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GILD were disappointed as the stock returned -5.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
