Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. In this article we are going to take a look at smart money sentiment towards Amgen, Inc. (NASDAQ:AMGN).
Is Amgen, Inc. (NASDAQ:AMGN) a buy right now? The best stock pickers are getting more bullish. The number of bullish hedge fund bets inched up by 6 recently. Our calculations also showed that AMGN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to view the key hedge fund action surrounding Amgen, Inc. (NASDAQ:AMGN).
What have hedge funds been doing with Amgen, Inc. (NASDAQ:AMGN)?
Heading into the fourth quarter of 2019, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AMGN over the last 17 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Amgen, Inc. (NASDAQ:AMGN) was held by Renaissance Technologies, which reported holding $707.9 million worth of stock at the end of September. It was followed by D E Shaw with a $240.5 million position. Other investors bullish on the company included Pzena Investment Management, AQR Capital Management, and GLG Partners. In terms of the portfolio weights assigned to each position Valueworks LLC allocated the biggest weight to Amgen, Inc. (NASDAQ:AMGN), around 4.47% of its 13F portfolio. Chiron Investment Management is also relatively very bullish on the stock, dishing out 1.67 percent of its 13F equity portfolio to AMGN.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, assembled the most outsized position in Amgen, Inc. (NASDAQ:AMGN). Alyeska Investment Group had $39.1 million invested in the company at the end of the quarter. Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management also initiated a $24.4 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, David E. Shaw’s D E Shaw, and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Amgen, Inc. (NASDAQ:AMGN) but similarly valued. These stocks are Sanofi (NYSE:SNY), Union Pacific Corporation (NYSE:UNP), NextEra Energy, Inc. (NYSE:NEE), and AbbVie Inc (NYSE:ABBV). All of these stocks’ market caps resemble AMGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNY | 27 | 985072 | 2 |
| UNP | 62 | 5197745 | -2 |
| NEE | 41 | 1505214 | 1 |
| ABBV | 61 | 4434502 | 6 |
| Average | 47.75 | 3030633 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.75 hedge funds with bullish positions and the average amount invested in these stocks was $3031 million. That figure was $2570 million in AMGN’s case. Union Pacific Corporation (NYSE:UNP) is the most popular stock in this table. On the other hand Sanofi (NYSE:SNY) is the least popular one with only 27 bullish hedge fund positions. Amgen, Inc. (NASDAQ:AMGN) 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 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately AMGN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AMGN were disappointed as the stock returned 28.6% in 2019 (through December 23rd) 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.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
