Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN).
Is Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) an attractive investment now? The smart money was taking an optimistic view. The number of bullish hedge fund bets rose by 6 in recent months. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 42. Our calculations also showed that BHVN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 27 hedge funds in our database with BHVN positions at the end of the second quarter.
Robert Atchinson of Adage Capital Management
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. With all of this in mind let’s review the fresh hedge fund action regarding Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN).
Do Hedge Funds Think BHVN Is A Good Stock To Buy Now?
At the end of September, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in BHVN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Marshall Wace LLP held the most valuable stake in Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), which was worth $377.6 million at the end of the third quarter. On the second spot was Polar Capital which amassed $174.5 million worth of shares. Knoll Capital Management, Armistice Capital, and Kingdon Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Knoll Capital Management allocated the biggest weight to Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), around 59.36% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, designating 6.17 percent of its 13F equity portfolio to BHVN.
As one would reasonably expect, specific money managers have jumped into Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) headfirst. Fisher Asset Management, managed by Ken Fisher, established the largest position in Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN). Fisher Asset Management had $37.2 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $17.9 million position during the quarter. The following funds were also among the new BHVN investors: Anand Parekh’s Alyeska Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) but similarly valued. We will take a look at Algonquin Power & Utilities Corp. (NYSE:AQN), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Sunrun Inc (NASDAQ:RUN), Ascendis Pharma A/S (NASDAQ:ASND), Globe Life Inc. (NYSE:GL), Syneos Health, Inc. (NASDAQ:SYNH), and Reliance Steel & Aluminum Co. (NYSE:RS). This group of stocks’ market valuations resemble BHVN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AQN | 15 | 152646 | -9 |
| NBIX | 31 | 980578 | -1 |
| RUN | 37 | 1677910 | -8 |
| ASND | 23 | 2827508 | -6 |
| GL | 27 | 775771 | -1 |
| SYNH | 33 | 474708 | 0 |
| RS | 24 | 346919 | -3 |
| Average | 27.1 | 1033720 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $1034 million. That figure was $1064 million in BHVN’s case. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand Algonquin Power & Utilities Corp. (NYSE:AQN) is the least popular one with only 15 bullish hedge fund positions. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BHVN is 74.5. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately BHVN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BHVN were disappointed as the stock returned -19.2% 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 many of these stocks already outperformed the market since 2019.
Follow Biohaven Pharmaceutical Holding Co Ltd. (NYSE:BHVN)
Follow Biohaven Pharmaceutical Holding Co Ltd. (NYSE:BHVN)
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Disclosure: None. This article was originally published at Insider Monkey.
