Hedge Funds Aren’t Crazy About Moderna, Inc. (MRNA) Anymore

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 Moderna, Inc. (NASDAQ:MRNA).

Moderna, Inc. (NASDAQ:MRNA) has experienced a decrease in hedge fund interest lately. Moderna, Inc. (NASDAQ:MRNA) was in 37 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that MRNA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At the moment there are plenty of methods shareholders employ to grade stocks. Some of the less utilized methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can beat the market by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Andrew Sandler of Sandler Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Now let’s view the recent hedge fund action surrounding Moderna, Inc. (NASDAQ:MRNA).

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

At Q2’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 37 hedge funds with a bullish position in MRNA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Moderna, Inc. (NASDAQ:MRNA) was held by Coatue Management, which reported holding $1443 million worth of stock at the end of June. It was followed by Theleme Partners with a $1426.8 million position. Other investors bullish on the company included Lone Pine Capital, Renaissance Technologies, and D E Shaw. In terms of the portfolio weights assigned to each position Theleme Partners allocated the biggest weight to Moderna, Inc. (NASDAQ:MRNA), around 41.66% of its 13F portfolio. Heathbridge Capital Management is also relatively very bullish on the stock, setting aside 7.62 percent of its 13F equity portfolio to MRNA.

Since Moderna, Inc. (NASDAQ:MRNA) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers that elected to cut their entire stakes heading into Q3. It’s worth mentioning that Ross Turner’s Pelham Capital cut the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $29.5 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also dumped its stock, about $6.7 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds heading into Q3.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Moderna, Inc. (NASDAQ:MRNA) but similarly valued. We will take a look at Uber Technologies, Inc. (NYSE:UBER), Anthem Inc (NYSE:ANTM), Lam Research Corporation (NASDAQ:LRCX), Airbnb, Inc. (NASDAQ:ABNB), British American Tobacco plc (NYSE:BTI), Infosys Limited (NYSE:INFY), and Booking Holdings Inc. (NASDAQ:BKNG). This group of stocks’ market valuations are similar to MRNA’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 64.6 hedge funds with bullish positions and the average amount invested in these stocks was $4542 million. That figure was $5755 million in MRNA’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 12 bullish hedge fund positions. Moderna, Inc. (NASDAQ:MRNA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MRNA is 40.2. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. A small number of hedge funds were also right about betting on MRNA as the stock returned 29.8% since the end of the second quarter (through 10/11) and outperformed the market by an even larger margin.

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