Hedge Funds Are Still Crazy About Alexion Pharmaceuticals, Inc. (ALXN)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Hedge fund interest in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ALXN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare ALXN to other stocks including Hilton Worldwide Holdings Inc (NYSE:HLT), Corning Incorporated (NYSE:GLW), and Zimmer Biomet Holdings Inc (NYSE:ZBH) to get a better sense of its popularity.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Matthew Halbower of Pentwater Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to analyze the new hedge fund action surrounding Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN).

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

At the end of the first quarter, a total of 77 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ALXN over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Pentwater Capital Management was the largest shareholder of Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), with a stake worth $655.9 million reported as of the end of March. Trailing Pentwater Capital Management was Adage Capital Management, which amassed a stake valued at $648.7 million. Baker Bros. Advisors, Renaissance Technologies, and Millennium Management 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 Twin Capital Management allocated the biggest weight to Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), around 22.46% of its 13F portfolio. Sand Grove Capital Partners is also relatively very bullish on the stock, dishing out 15.91 percent of its 13F equity portfolio to ALXN.

Because Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedgies that elected to cut their positions entirely in the first quarter. Interestingly, Stephen DuBois’s Camber Capital Management said goodbye to the largest position of the 750 funds watched by Insider Monkey, totaling close to $183.6 million in stock, and David Cohen and Harold Levy’s Iridian Asset Management was right behind this move, as the fund dumped about $102.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN). These stocks are Hilton Worldwide Holdings Inc (NYSE:HLT), Corning Incorporated (NYSE:GLW), Zimmer Biomet Holdings Inc (NYSE:ZBH), Peloton Interactive, Inc. (NASDAQ:PTON), Marvell Technology, Inc. (NASDAQ:MRVL), Orange SA (NYSE:ORAN), and The Hershey Company (NYSE:HSY). This group of stocks’ market valuations match ALXN’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $1960 million. That figure was $6915 million in ALXN’s case. Peloton Interactive, Inc. (NASDAQ:PTON) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is more popular among hedge funds. Our overall hedge fund sentiment score for ALXN is 85. 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. 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 returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on ALXN as the stock returned 18.8% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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