Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of AstraZeneca plc (NYSE:AZN) based on that data and determine whether they were really smart about the stock.
AstraZeneca plc (NYSE:AZN) has experienced an increase in hedge fund interest in recent months. AstraZeneca plc (NYSE:AZN) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 26 hedge funds in our database with AZN holdings at the end of March. Our calculations also showed that AZN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 let’s take a look at the fresh hedge fund action regarding AstraZeneca plc (NYSE:AZN).
How are hedge funds trading AstraZeneca plc (NYSE:AZN)?
At Q2’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 46% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AZN over the last 20 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in AstraZeneca plc (NYSE:AZN) was held by Fisher Asset Management, which reported holding $895.3 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $428.5 million position. Other investors bullish on the company included Renaissance Technologies, Balyasny Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to AstraZeneca plc (NYSE:AZN), around 4.8% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, setting aside 4.79 percent of its 13F equity portfolio to AZN.
As industrywide interest jumped, specific money managers have jumped into AstraZeneca plc (NYSE:AZN) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the most outsized position in AstraZeneca plc (NYSE:AZN). Two Sigma Advisors had $41.9 million invested in the company at the end of the quarter. Christopher James’s Partner Fund Management also made a $33.6 million investment in the stock during the quarter. The other funds with brand new AZN positions are Brandon Haley’s Holocene Advisors, Israel Englander’s Millennium Management, and Guy Levy’s Soleus Capital.
Let’s also examine hedge fund activity in other stocks similar to AstraZeneca plc (NYSE:AZN). These stocks are Amgen, Inc. (NASDAQ:AMGN), China Mobile Limited (NYSE:CHL), McDonald’s Corporation (NYSE:MCD), Accenture Plc (NYSE:ACN), Costco Wholesale Corporation (NASDAQ:COST), Bristol Myers Squibb Company (NYSE:BMY), and T-Mobile US, Inc. (NYSE:TMUS). This group of stocks’ market values are closest to AZN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMGN | 51 | 1794209 | -1 |
| CHL | 9 | 456289 | -2 |
| MCD | 57 | 1356732 | -9 |
| ACN | 44 | 1080127 | -5 |
| COST | 61 | 4730681 | -7 |
| BMY | 136 | 6605597 | 10 |
| TMUS | 113 | 7158311 | 48 |
| Average | 67.3 | 3311707 | 4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 67.3 hedge funds with bullish positions and the average amount invested in these stocks was $3312 million. That figure was $1921 million in AZN’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 9 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 51.4. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately AZN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AZN investors were disappointed as the stock returned 6.7% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
