Hedge Funds Are Dumping Regeneron Pharmaceuticals Inc (REGN)

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Regeneron Pharmaceuticals Inc (NASDAQ:REGN) .

Is Regeneron Pharmaceuticals Inc (NASDAQ:REGN) the right investment to pursue these days? Money managers are categorically in a bearish mood. The number of long hedge fund investments slashed by3 recently. REGNwas in 29 hedge funds’ portfolios at the end of the third quarter of 2016. There were 32 hedge funds in our database with REGN holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Bank of Montreal (USA) (NYSE:BMO), Netflix, Inc. (NASDAQ:NFLX), and Phillips 66 (NYSE:PSX) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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Now, let’s take a gander at the key action surrounding Regeneron Pharmaceuticals Inc (NASDAQ:REGN).

Hedge fund activity in Regeneron Pharmaceuticals Inc (NASDAQ:REGN)

At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, down 9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in REGN over the last 5 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, OrbiMed Advisors, led by Samuel Isaly, holds the most valuable position in Regeneron Pharmaceuticals Inc (NASDAQ:REGN). According to its latest 13F filing, the fund has a $142.8 million position in the stock, comprising 1.6% of its 13F portfolio. Coming in second is John Overdeck and David Siegel of Two Sigma Advisors, with a $106.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include D. E. Shaw’s D E Shaw, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Due to the fact that Regeneron Pharmaceuticals Inc (NASDAQ:REGN) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there was a specific group of money managers that elected to cut their positions entirely in the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group said goodbye to the largest position of the “upper crust” of funds followed by Insider Monkey, totaling about $76.1 million in call options. Jim Simons’s fund, Renaissance Technologies, also cut its stock, about $73.6 million worth of REGN shares.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Regeneron Pharmaceuticals Inc (NASDAQ:REGN) but similarly valued. We will take a look at Bank of Montreal (USA) (NYSE:BMO), Netflix, Inc. (NASDAQ:NFLX), Phillips 66 (NYSE:PSX), and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). All of these stocks’ market caps resemble REGN’s market cap.

As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $3.88 billion. That figure was a meager $630 million in REGN’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Bank of Montreal (USA) (NYSE:BMO) is the least popular one with only 16 bullish hedge fund positions. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NFLX might be a better candidate to consider taking a long position in.

Disclosure: none.