Hedge Funds Are Done Selling Gilead Sciences, Inc. (GILD)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Gilead Sciences, Inc. (NASDAQ:GILD)? The smart money sentiment can provide an answer to this question.

Gilead Sciences, Inc. (NASDAQ:GILD) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Gilead Sciences, Inc. (NASDAQ:GILD) was in 55 hedge funds’ portfolios at the end of September. The all time high for this statistic is 93. There were 54 hedge funds in our database with GILD holdings at the end of June. Our calculations also showed that GILD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a gander at the fresh hedge fund action encompassing Gilead Sciences, Inc. (NASDAQ:GILD).

Alex Denner of Sarissa Capital Management

Do Hedge Funds Think GILD Is A Good Stock To Buy Now?

At Q3’s end, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. On the other hand, there were a total of 61 hedge funds with a bullish position in GILD a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

The largest stake in Gilead Sciences, Inc. (NASDAQ:GILD) was held by Renaissance Technologies, which reported holding $384.2 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $330.2 million position. Other investors bullish on the company included Sarissa Capital Management, Citadel Investment Group, and Ariel Investments. In terms of the portfolio weights assigned to each position Sarissa Capital Management allocated the biggest weight to Gilead Sciences, Inc. (NASDAQ:GILD), around 16.27% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, designating 8.27 percent of its 13F equity portfolio to GILD.

Now, some big names have been driving this bullishness. Partner Fund Management, managed by Christopher James, assembled the biggest call position in Gilead Sciences, Inc. (NASDAQ:GILD). Partner Fund Management had $67.3 million invested in the company at the end of the quarter. Mike Masters’s Masters Capital Management also initiated a $34.9 million position during the quarter. The other funds with brand new GILD positions are Matthew Hulsizer’s PEAK6 Capital Management, Efrem Kamen’s Pura Vida Investments, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Gilead Sciences, Inc. (NASDAQ:GILD) but similarly valued. These stocks are PetroChina Company Limited (NYSE:PTR), Automatic Data Processing, Inc. (NASDAQ:ADP), Uber Technologies, Inc. (NYSE:UBER), Altria Group Inc (NYSE:MO), Brookfield Asset Management Inc. (NYSE:BAM), Mercadolibre Inc (NASDAQ:MELI), and Blackstone Inc. (NYSE:BX). All of these stocks’ market caps are similar to GILD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 56 hedge funds with bullish positions and the average amount invested in these stocks was $3532 million. That figure was $1752 million in GILD’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 7 bullish hedge fund positions. Gilead Sciences, Inc. (NASDAQ:GILD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GILD is 41.4. 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 negative signal and 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately GILD wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GILD investors were disappointed as the stock returned -1.3% since the end of September (through 11/30) 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.