In this article we will check out the progression of hedge fund sentiment towards Moderna, Inc. (NASDAQ:MRNA) and determine whether it is a good investment 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.
Is Moderna, Inc. (NASDAQ:MRNA) an attractive stock to buy now? Money managers are becoming more confident. The number of long hedge fund positions moved up by 13 lately. Our calculations also showed that MRNA isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kerr Neilson of Platinum Asset Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the new hedge fund action encompassing Moderna, Inc. (NASDAQ:MRNA).
What does smart money think about Moderna, Inc. (NASDAQ:MRNA)?
At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 108% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in MRNA over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Patrick Degorce’s Theleme Partners has the largest position in Moderna, Inc. (NASDAQ:MRNA), worth close to $267.5 million, corresponding to 19.2% of its total 13F portfolio. The second largest stake is held by Platinum Asset Management, managed by Kerr Neilson, which holds a $46 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Andreas Halvorsen’s Viking Global, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Theleme Partners allocated the biggest weight to Moderna, Inc. (NASDAQ:MRNA), around 19.24% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, dishing out 5.24 percent of its 13F equity portfolio to MRNA.
As one would reasonably expect, some big names have jumped into Moderna, Inc. (NASDAQ:MRNA) headfirst. Millennium Management, managed by Israel Englander, created the largest position in Moderna, Inc. (NASDAQ:MRNA). Millennium Management had $18.5 million invested in the company at the end of the quarter. Arsani William’s Logos Capital also initiated a $13.8 million position during the quarter. The other funds with new positions in the stock are Scott Bessent’s Key Square Capital Management, Benjamin A. Smith’s Laurion Capital Management, and David Kowitz and Sheldon Kasowitz’s Indus Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Moderna, Inc. (NASDAQ:MRNA) but similarly valued. These stocks are Tractor Supply Company (NASDAQ:TSCO), Teva Pharmaceutical Industries Limited (NYSE:TEVA), Freeport-McMoRan Inc. (NYSE:FCX), and Genuine Parts Company (NYSE:GPC). This group of stocks’ market values are similar to MRNA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSCO | 37 | 510015 | -7 |
| TEVA | 29 | 866697 | 6 |
| FCX | 42 | 770016 | -13 |
| GPC | 22 | 164418 | 1 |
| Average | 32.5 | 577787 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $578 million. That figure was $425 million in MRNA’s case. Freeport-McMoRan Inc. (NYSE:FCX) is the most popular stock in this table. On the other hand Genuine Parts Company (NYSE:GPC) is the least popular one with only 22 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 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on MRNA as the stock returned 100.6% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
