Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published this article and predicted that US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. After several tireless days we have finished crunching the numbers from nearly 835 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Mylan N.V. (NASDAQ:MYL).
Mylan N.V. (NASDAQ:MYL) has experienced an increase in hedge fund sentiment recently. MYL was in 47 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 35 hedge funds in our database with MYL holdings at the end of the previous quarter. Our calculations also showed that MYL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Richard S. Pzena of Pzena Investment Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now we’re going to take a peek at the fresh hedge fund action encompassing Mylan N.V. (NASDAQ:MYL).
What have hedge funds been doing with Mylan N.V. (NASDAQ:MYL)?
At Q4’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 34% from the previous quarter. By comparison, 42 hedge funds held shares or bullish call options in MYL a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pzena Investment Management held the most valuable stake in Mylan N.V. (NASDAQ:MYL), which was worth $417.7 million at the end of the third quarter. On the second spot was Paulson & Co which amassed $241.3 million worth of shares. AQR Capital Management, Camber Capital Management, and Deerfield Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Courage Capital allocated the biggest weight to Mylan N.V. (NASDAQ:MYL), around 10.64% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, designating 8.95 percent of its 13F equity portfolio to MYL.
As one would reasonably expect, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in Mylan N.V. (NASDAQ:MYL). Marshall Wace LLP had $14.5 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $14.2 million position during the quarter. The other funds with new positions in the stock are Andrew Kurita’s Kettle Hill Capital Management, Alec Litowitz and Ross Laser’s Magnetar Capital, and Renaissance Technologies.
Let’s now take a look at hedge fund activity in other stocks similar to Mylan N.V. (NASDAQ:MYL). We will take a look at Comerica Incorporated (NYSE:CMA), Towers Watson & Co (NYSE:TW), Companhia de Saneamento Basico (NYSE:SBS), and Camden Property Trust (NYSE:CPT). This group of stocks’ market caps match MYL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMA | 36 | 542380 | 4 |
| TW | 36 | 566781 | -2 |
| SBS | 12 | 446923 | 1 |
| CPT | 31 | 471165 | 9 |
| Average | 28.75 | 506812 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $507 million. That figure was $1849 million in MYL’s case. Comerica Incorporated (NYSE:CMA) is the most popular stock in this table. On the other hand Companhia de Saneamento Basico (NYSE:SBS) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Mylan N.V. (NASDAQ:MYL) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th and still beat the market by 1.9 percentage points. Unfortunately MYL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MYL were disappointed as the stock returned -28.5% during the first two months of 2020 (through March 9th) 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 most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
