The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX).
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) was in 46 hedge funds’ portfolios at the end of September. VRTX shareholders have witnessed an increase in enthusiasm from smart money lately. There were 40 hedge funds in our database with VRTX positions at the end of the previous quarter. Our calculations also showed that VRTX isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the recent hedge fund action encompassing Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX).
What does smart money think about Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)?
Heading into the fourth quarter of 2019, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. On the other hand, there were a total of 41 hedge funds with a bullish position in VRTX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), with a stake worth $982.5 million reported as of the end of September. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $153.1 million. Adage Capital Management, OrbiMed Advisors, and Citadel Investment Group 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 Copernicus Capital Management allocated the biggest weight to Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), around 10.22% of its portfolio. Healthcor Management is also relatively very bullish on the stock, designating 4.35 percent of its 13F equity portfolio to VRTX.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, assembled the most outsized position in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Holocene Advisors had $74.3 million invested in the company at the end of the quarter. Michael Kharitonov and Jon David McAuliffe’s Voleon Capital also initiated a $7.5 million position during the quarter. The following funds were also among the new VRTX investors: Matthew Hulsizer’s PEAK6 Capital Management, Ray Dalio’s Bridgewater Associates, and Matthew Tewksbury’s Stevens Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). These stocks are Tesla Inc. (NASDAQ:TSLA), EOG Resources Inc (NYSE:EOG), Biogen Inc. (NASDAQ:BIIB), and Public Storage (NYSE:PSA). This group of stocks’ market values match VRTX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSLA | 28 | 570594 | -9 |
| EOG | 48 | 1449930 | 12 |
| BIIB | 48 | 4207480 | 5 |
| PSA | 22 | 876105 | 2 |
| Average | 36.5 | 1776027 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $1776 million. That figure was $2296 million in VRTX’s case. EOG Resources Inc (NYSE:EOG) is the most popular stock in this table. On the other hand Public Storage (NYSE:PSA) is the least popular one with only 22 bullish hedge fund positions. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Hedge funds were also right about betting on VRTX as the stock returned 28.7% during the fourth quarter (through 11/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
