In this article we will take a look at whether hedge funds think Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) a bargain? Prominent investors are becoming hopeful. The number of bullish hedge fund bets moved up by 4 lately. Our calculations also showed that JAZZ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a multitude of indicators market participants employ to value their holdings. A pair of the less utilized indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the S&P 500 by a significant amount (see the details here).
Cliff Asness of AQR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the latest hedge fund action regarding Jazz Pharmaceuticals Plc (NASDAQ:JAZZ).
What does smart money think about Jazz Pharmaceuticals Plc (NASDAQ:JAZZ)?
At Q1’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in JAZZ over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), which was worth $343 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $234.8 million worth of shares. Sarissa Capital Management, Holocene Advisors, and GLG Partners 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 Sarissa Capital Management allocated the biggest weight to Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), around 9.73% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, dishing out 5.03 percent of its 13F equity portfolio to JAZZ.
As industrywide interest jumped, specific money managers have jumped into Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) headfirst. Rhenman & Partners Asset Management, managed by Henrik Rhenman, established the most valuable position in Jazz Pharmaceuticals Plc (NASDAQ:JAZZ). Rhenman & Partners Asset Management had $12 million invested in the company at the end of the quarter. Joe Riccardo’s Healthcare Value Capital also initiated a $3 million position during the quarter. The following funds were also among the new JAZZ investors: Steve Cohen’s Point72 Asset Management, Matthew Hulsizer’s PEAK6 Capital Management, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) but similarly valued. These stocks are Knight-Swift Transportation Inc. (NYSE:KNX), Gentex Corporation (NASDAQ:GNTX), UGI Corp (NYSE:UGI), and Genpact Limited (NYSE:G). All of these stocks’ market caps are similar to JAZZ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KNX | 32 | 352814 | 6 |
| GNTX | 37 | 478532 | 5 |
| UGI | 27 | 253339 | 4 |
| G | 34 | 335413 | -3 |
| Average | 32.5 | 355025 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $355 million. That figure was $805 million in JAZZ’s case. Gentex Corporation (NASDAQ:GNTX) is the most popular stock in this table. On the other hand UGI Corp (NYSE:UGI) is the least popular one with only 27 bullish hedge fund positions. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on JAZZ, though not to the same extent, as the stock returned 19.6% during the second quarter and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
