Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Royalty Pharma Plc (NASDAQ:RPRX).
Royalty Pharma Plc (NASDAQ:RPRX) has experienced an increase in hedge fund interest lately. Royalty Pharma Plc (NASDAQ:RPRX) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 18 hedge funds in our database with RPRX holdings at the end of December. Our calculations also showed that RPRX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
If you’d ask most shareholders, hedge funds are viewed as slow, outdated investment tools of years past. While there are over 8000 funds with their doors open today, Our experts look at the aristocrats of this club, approximately 850 funds. Most estimates calculate that this group of people command the majority of the hedge fund industry’s total capital, and by tracking their finest picks, Insider Monkey has deciphered numerous investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Alec Litowitz of Magnetar Capital
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Do Hedge Funds Think RPRX Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RPRX over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Phill Gross and Robert Atchinson’s Adage Capital Management has the most valuable position in Royalty Pharma Plc (NASDAQ:RPRX), worth close to $1.0769 billion, amounting to 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Harvard Management Co, led by Rick Slocum, holding a $467.4 million position; 26.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism comprise Andreas Halvorsen’s Viking Global, Frank Fu’s CaaS Capital and Aaron Cowen’s Suvretta Capital Management. In terms of the portfolio weights assigned to each position Harvard Management Co allocated the biggest weight to Royalty Pharma Plc (NASDAQ:RPRX), around 26.11% of its 13F portfolio. Adage Capital Management is also relatively very bullish on the stock, dishing out 2.2 percent of its 13F equity portfolio to RPRX.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the most valuable position in Royalty Pharma Plc (NASDAQ:RPRX). Millennium Management had $7 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $3.3 million investment in the stock during the quarter. The following funds were also among the new RPRX investors: Greg Eisner’s Engineers Gate Manager, Murray Stahl’s Horizon Asset Management, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks similar to Royalty Pharma Plc (NASDAQ:RPRX). We will take a look at Ecopetrol S.A. (NYSE:EC), Magna International Inc. (NYSE:MGA), BioNTech SE (NASDAQ:BNTX), XPeng Inc. (NYSE:XPEV), Zebra Technologies Corporation (NASDAQ:ZBRA), Ryanair Holdings plc (NASDAQ:RYAAY), and Banco Santander (Brasil) SA (NYSE:BSBR). This group of stocks’ market values match RPRX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EC | 8 | 98728 | 1 |
| MGA | 34 | 671764 | -4 |
| BNTX | 18 | 172627 | 1 |
| XPEV | 19 | 976276 | -11 |
| ZBRA | 35 | 1163526 | -6 |
| RYAAY | 14 | 568235 | -9 |
| BSBR | 5 | 3887 | -1 |
| Average | 19 | 522149 | -4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $522 million. That figure was $1835 million in RPRX’s case. Zebra Technologies Corporation (NASDAQ:ZBRA) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 5 bullish hedge fund positions. Royalty Pharma Plc (NASDAQ:RPRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RPRX is 75. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately RPRX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RPRX were disappointed as the stock returned -3.8% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Royalty Pharma Plc (NASDAQ:RPRX)
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Disclosure: None. This article was originally published at Insider Monkey.
