How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding AstraZeneca plc (NYSE:AZN).
Is AstraZeneca plc (NYSE:AZN) a buy, sell, or hold? Investors who are in the know were taking a bullish view. The number of long hedge fund bets advanced by 4 in recent months. AstraZeneca plc (NYSE:AZN) was in 41 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 41. This means the bullish number of hedge fund positions in this stock currently sits at its new all time high. Our calculations also showed that AZN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 37 hedge funds in our database with AZN positions at the end of the second quarter.
Phillip Gross of Adage Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a look at the latest hedge fund action surrounding AstraZeneca plc (NYSE:AZN).
Do Hedge Funds Think AZN Is A Good Stock To Buy Now?
At third quarter’s end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the second quarter of 2021. By comparison, 33 hedge funds held shares or bullish call options in AZN a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in AstraZeneca plc (NYSE:AZN). Fisher Asset Management has a $1.1766 billion position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is GQG Partners, managed by Rajiv Jain, which holds a $1.1098 billion position; 3% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish encompass Renaissance Technologies, Phill Gross and Robert Atchinson’s Adage Capital Management and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Sphera Global Healthcare Fund allocated the biggest weight to AstraZeneca plc (NYSE:AZN), around 6.52% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, earmarking 5.93 percent of its 13F equity portfolio to AZN.
Consequently, key hedge funds have jumped into AstraZeneca plc (NYSE:AZN) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, assembled the biggest position in AstraZeneca plc (NYSE:AZN). Adage Capital Management had $169 million invested in the company at the end of the quarter. Zach Schreiber’s Point State Capital also made a $97.7 million investment in the stock during the quarter. The following funds were also among the new AZN investors: Farallon Capital, Kevin Molloy’s Iron Triangle Partners, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as AstraZeneca plc (NYSE:AZN) but similarly valued. We will take a look at Novartis AG (NYSE:NVS), McDonald’s Corporation (NYSE:MCD), Morgan Stanley (NYSE:MS), Texas Instruments Incorporated (NASDAQ:TXN), Sea Limited (NYSE:SE), Shopify Inc (NYSE:SHOP), and Medtronic plc (NYSE:MDT). This group of stocks’ market caps match AZN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NVS | 22 | 1439973 | 0 |
| MCD | 58 | 3339098 | -8 |
| MS | 65 | 4990950 | -4 |
| TXN | 40 | 1938965 | -10 |
| SE | 117 | 14135309 | 13 |
| SHOP | 73 | 11451372 | -12 |
| MDT | 62 | 2278950 | -6 |
| Average | 62.4 | 5653517 | -3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 62.4 hedge funds with bullish positions and the average amount invested in these stocks was $5654 million. That figure was $3757 million in AZN’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 bullish hedge fund positions. AstraZeneca plc (NYSE:AZN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AZN is 49. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately AZN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AZN investors were disappointed as the stock returned -8.7% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Astrazeneca Plc (NYSE:AZN)
Follow Astrazeneca Plc (NYSE:AZN)
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Disclosure: None. This article was originally published at Insider Monkey.
