The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Novo Nordisk A/S (NYSE:NVO) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Novo Nordisk A/S (NYSE:NVO) a buy here? Investors who are in the know are in a bullish mood. The number of bullish hedge fund bets moved up by 4 recently. Our calculations also showed that NVO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
Michael Castor of Sio Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the latest hedge fund action regarding Novo Nordisk A/S (NYSE:NVO).
What does smart money think about Novo Nordisk A/S (NYSE:NVO)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the second quarter of 2019. By comparison, 17 hedge funds held shares or bullish call options in NVO a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Novo Nordisk A/S (NYSE:NVO) was held by Renaissance Technologies, which reported holding $1281.5 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $786.4 million position. Other investors bullish on the company included Partner Fund Management, Arrowstreet Capital, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Partner Fund Management allocated the biggest weight to Novo Nordisk A/S (NYSE:NVO), around 11.79% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, earmarking 1.9 percent of its 13F equity portfolio to NVO.
As one would reasonably expect, key hedge funds were breaking ground themselves. Partner Fund Management, managed by Christopher James, established the biggest position in Novo Nordisk A/S (NYSE:NVO). Partner Fund Management had $399.2 million invested in the company at the end of the quarter. Stephen DuBois’s Camber Capital Management also made a $36.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Michael Castor’s Sio Capital, and Michael M. Rothenberg’s Moab Capital Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Novo Nordisk A/S (NYSE:NVO) but similarly valued. These stocks are Paypal Holdings Inc (NASDAQ:PYPL), Honeywell International Inc. (NYSE:HON), Texas Instruments Incorporated (NASDAQ:TXN), and Philip Morris International Inc. (NYSE:PM). This group of stocks’ market caps match NVO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PYPL | 95 | 4135931 | 0 |
| HON | 53 | 1926350 | -3 |
| TXN | 52 | 2578705 | 9 |
| PM | 53 | 3693236 | 14 |
| Average | 63.25 | 3083556 | 5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 63.25 hedge funds with bullish positions and the average amount invested in these stocks was $3084 million. That figure was $3007 million in NVO’s case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand Texas Instruments Incorporated (NASDAQ:TXN) is the least popular one with only 52 bullish hedge fund positions. Compared to these stocks Novo Nordisk A/S (NYSE:NVO) is even less popular than TXN. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on NVO, though not to the same extent, as the stock returned 8.6% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
