The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25th through October 30th, which clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards AbbVie Inc (NYSE:ABBV) and see how it was affected.
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Is AbbVie Inc (NYSE:ABBV) a buy here? Investors who are in the know are in a pessimistic mood. The number of long hedge fund positions decreased by 1 in recent months. At the end of this article, we will also compare AbbVie Inc (NYSE:ABBV) to other stocks including The Boeing Company (NYSE:BA), 3M Co (NYSE:MMM), and United Parcel Service, Inc. (NYSE:UPS) to get a better sense of its popularity.
Follow Abbvie Inc. (NYSE:ABBV)
Follow Abbvie Inc. (NYSE:ABBV)
Today there are many methods stock traders have at their disposal to size up stocks. A couple of the best methods are hedge fund and insider trading interest. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the S&P 500 by a healthy amount (see the details here).
Now, we’re going to view the new action surrounding AbbVie Inc (NYSE:ABBV).
How have hedgies been trading AbbVie Inc (NYSE:ABBV)?
Heading into Q4, a total of 78 of the hedge funds tracked by Insider Monkey were bullish in this stock, a change of -1% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings substantially.
According to our calculations, Glenview Capital, managed by Larry Robbins, holds the largest position in AbbVie Inc (NYSE:ABBV). Glenview Capital has a $879.9 million position in the stock, comprising 4.4% of its 13F portfolio. Coming in second is Baker Bros. Advisors, led by Julian Baker and Felix Baker, holding a $782.1 million position; 7.2% of its 13F portfolio is allocated to the company. Other hedgies that are bullish consist of Samuel Isaly’s healthcare hedge fund OrbiMed Advisors, and Neil Woodford’s Woodford Investment Management.
Judging by the fact that AbbVie Inc (NYSE:ABBV) has experienced bearish sentiment from the smart money, it’s easy to see that there is a sect of funds who sold off their entire stakes in third quarter. Intriguingly, Steve Cohen’s family office, Point72 Asset Management, dumped the largest position of all the hedgies followed by Insider Monkey, valued at close to $83.7 million in call options., and Matthew Halbower of Pentwater Capital Management was right behind this move, as the fund cut about $42.2 million worth.
Let’s also examine hedge fund activity in other stocks similar to AbbVie Inc (NYSE:ABBV). These stocks are The Boeing Company (NYSE:BA), 3M Co (NYSE:MMM), United Parcel Service, Inc. (NYSE:UPS), and Schlumberger Limited. (NYSE:SLB). All of these stocks’ market caps resemble AbbVie Inc (NYSE:ABBV)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BA | 35 | 1177207 | -9 |
| MMM | 42 | 1907344 | 2 |
| UPS | 40 | 2403170 | -12 |
| SLB | 61 | 2645743 | 6 |
As you can see these stocks had an average of 44.5 hedge funds with bullish positions and the average amount invested in these stocks was $2033 million. Schlumberger Limited. (NYSE:SLB) is the most popular stock in this table. On the other hand The Boeing Company (NYSE:BA) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks AbbVie Inc (NYSE:ABBV) is more popular among hedge funds. Considering that hedge funds are fond of this stock, despite the recent decline in hedge fund interest it may still be a good idea to analyze it in detail and potentially include it in your portfolio.
