The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) based on those filings.
Is Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) undervalued? The smart money was becoming less hopeful. The number of long hedge fund positions were trimmed by 6 in recent months. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) was in 33 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 39. Our calculations also showed that ALNY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 39 hedge funds in our database with ALNY positions at the end of the fourth quarter.
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.
Lee Ainslie of Maverick Capital
At Insider Monkey, we scour multiple sources to uncover 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 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. 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. Keeping this in mind we’re going to take a look at the latest hedge fund action encompassing Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).
Do Hedge Funds Think ALNY Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ALNY over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Casdin Capital held the most valuable stake in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), which was worth $124.2 million at the end of the fourth quarter. On the second spot was Maverick Capital which amassed $112.4 million worth of shares. Farallon Capital, Alkeon Capital Management, and Point72 Asset 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 Casdin Capital allocated the biggest weight to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), around 3.7% of its 13F portfolio. Bridger Management is also relatively very bullish on the stock, earmarking 2.99 percent of its 13F equity portfolio to ALNY.
Judging by the fact that Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of money managers that decided to sell off their full holdings by the end of the first quarter. It’s worth mentioning that Joel Ramin’s 12 West Capital Management sold off the biggest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $95.5 million in stock, and Ricky Sandler’s Eminence Capital was right behind this move, as the fund sold off about $16.4 million worth. These transactions are important to note, as total hedge fund interest fell by 6 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) but similarly valued. We will take a look at Mid America Apartment Communities Inc (NYSE:MAA), ASE Technology Holding Co., Ltd. (NYSE:ASX), Penn National Gaming, Inc (NASDAQ:PENN), Nomura Holdings, Inc. (NYSE:NMR), MongoDB, Inc. (NASDAQ:MDB), Principal Financial Group Inc (NASDAQ:PFG), and Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX). This group of stocks’ market caps are closest to ALNY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAA | 25 | 251877 | -1 |
| ASX | 8 | 232071 | -1 |
| PENN | 42 | 907475 | 1 |
| NMR | 10 | 19579 | 4 |
| MDB | 46 | 1540962 | 10 |
| PFG | 31 | 208237 | 5 |
| FMX | 15 | 845908 | 1 |
| Average | 25.3 | 572301 | 2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $572 million. That figure was $740 million in ALNY’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 8 bullish hedge fund positions. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALNY is 57.3. 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 gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on ALNY as the stock returned 21.4% since the end of Q1 (through 7/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
