Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) has seen an increase in support from the world’s most elite money managers lately. Our calculations also showed that REGN isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most shareholders, hedge funds are viewed as unimportant, old investment vehicles of yesteryear. While there are more than 8,000 funds trading at present, We hone in on the crème de la crème of this group, about 700 funds. Most estimates calculate that this group of people manage the majority of all hedge funds’ total asset base, and by watching their top picks, Insider Monkey has deciphered a few investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by 6 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to view the recent hedge fund action encompassing Regeneron Pharmaceuticals Inc (NASDAQ:REGN).
Hedge fund activity in Regeneron Pharmaceuticals Inc (NASDAQ:REGN)
Heading into the fourth quarter of 2018, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in REGN over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was held by Two Sigma Advisors, which reported holding $249.2 million worth of stock at the end of September. It was followed by Healthcor Management LP with a $161.6 million position. Other investors bullish on the company included OrbiMed Advisors, Citadel Investment Group, and Renaissance Technologies.
Now, key hedge funds have jumped into Regeneron Pharmaceuticals Inc (NASDAQ:REGN) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the most outsized position in Regeneron Pharmaceuticals Inc (NASDAQ:REGN). Adage Capital Management had $36 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also initiated a $27.7 million position during the quarter. The other funds with brand new REGN positions are Benjamin A. Smith’s Laurion Capital Management, Peter Muller’s PDT Partners, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s now take a look at hedge fund activity in other stocks similar to Regeneron Pharmaceuticals Inc (NASDAQ:REGN). We will take a look at Intercontinental Exchange Inc (NYSE:ICE), Prologis Inc (NYSE:PLD), The Sherwin-Williams Company (NYSE:SHW), and Koninklijke Philips NV (NYSE:PHG). This group of stocks’ market caps are similar to REGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ICE | 36 | 2850130 | 3 |
| PLD | 25 | 666044 | -3 |
| SHW | 38 | 1412679 | 3 |
| PHG | 15 | 456151 | 1 |
| Average | 28.5 | 1346251 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.35 billion. That figure was $1.03 billion in REGN’s case. The Sherwin-Williams Company (NYSE:SHW) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 15 bullish hedge fund positions. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) 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. In this regard SHW might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
