Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published this article and predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits.
Is Neurocrine Biosciences, Inc. (NASDAQ:NBIX) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Neurocrine Biosciences, Inc. (NASDAQ:NBIX) was in 42 hedge funds’ portfolios at the end of the fourth quarter of 2019. NBIX has seen a decrease in hedge fund sentiment recently. There were 45 hedge funds in our database with NBIX positions at the end of the previous quarter. Our calculations also showed that NBIX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are tons of metrics investors employ to appraise their stock investments. A duo of the most innovative metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top money managers can beat the market by a solid amount (see the details here).
Samuel Isaly of OrbiMed Advisors
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind we’re going to take a look at the key hedge fund action regarding Neurocrine Biosciences, Inc. (NASDAQ:NBIX).
What does smart money think about Neurocrine Biosciences, Inc. (NASDAQ:NBIX)?
At the end of the fourth quarter, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NBIX over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Perceptive Advisors, managed by Joseph Edelman, holds the biggest position in Neurocrine Biosciences, Inc. (NASDAQ:NBIX). Perceptive Advisors has a $388.3 million position in the stock, comprising 7.7% of its 13F portfolio. The second most bullish fund manager is Kris Jenner, Gordon Bussard, Graham McPhail of Rock Springs Capital Management, with a $137.4 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Julian Baker and Felix Baker’s Baker Bros. Advisors, Samuel Isaly’s OrbiMed Advisors and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to Neurocrine Biosciences, Inc. (NASDAQ:NBIX), around 7.71% of its 13F portfolio. Parkman Healthcare Partners is also relatively very bullish on the stock, setting aside 4.82 percent of its 13F equity portfolio to NBIX.
Judging by the fact that Neurocrine Biosciences, Inc. (NASDAQ:NBIX) has faced falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few funds that elected to cut their full holdings in the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management sold off the biggest investment of all the hedgies monitored by Insider Monkey, comprising about $21.6 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $9.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 3 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Neurocrine Biosciences, Inc. (NASDAQ:NBIX) but similarly valued. We will take a look at American Financial Group, Inc. (NYSE:AFG), Vereit Inc (NYSE:VER), SEI Investments Company (NASDAQ:SEIC), and Crown Holdings, Inc. (NYSE:CCK). This group of stocks’ market values resemble NBIX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AFG | 25 | 387186 | -2 |
| VER | 28 | 549943 | -9 |
| SEIC | 29 | 351644 | 3 |
| CCK | 58 | 1378457 | 16 |
| Average | 35 | 666808 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $667 million. That figure was $1229 million in NBIX’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand American Financial Group, Inc. (NYSE:AFG) is the least popular one with only 25 bullish hedge fund positions. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th but beat the market by 1.9 percentage points. Unfortunately NBIX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NBIX were disappointed as the stock returned -17.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
