Is Alexion Pharmaceuticals, Inc. (ALXN) A Good Stock To Buy?

Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN).

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has experienced a decrease in hedge fund sentiment recently. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) was in 33 hedge funds’ portfolios at the end of September. There were 49 hedge funds in our database with Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) positions at the end of the previous quarter. At the end of this article, we will also compare Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) to other stocks, including Kroger Co. (NYSE:KR), Bank of Montreal (USA) (NYSE:BMO), and CIGNA Corporation (NYSE:CI) to get a better sense of its popularity.

In the financial world, there are a large number of tools that stock market investors have at their disposal to assess publicly traded companies. A couple of the best tools are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can trounce the broader indices by a solid amount (see the details here).

Now, we’re going to take a look at the key action regarding Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN).

How are hedge funds trading Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)?

At the end of September, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 33% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the number one position in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), worth close to $1.0232 billion, corresponding to 9.5% of its total 13F portfolio. Coming in second is OrbiMed Advisors, managed by Samuel Isaly, which holds a $348.2 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Panayotis Takis Sparaggis’ Alkeon Capital Management, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Renaissance Technologies.

Due to the fact that Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has witnessed a falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedgies that slashed their entire stakes in the third quarter. Intriguingly, Andreas Halvorsen’s Viking Global dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising about $36.5 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund sold off about $12.9 million worth of shares. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 16 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN). We will take a look at Kroger Co. (NYSE:KR), Bank of Montreal (USA) (NYSE:BMO), CIGNA Corporation (NYSE:CI), and BCE Inc. (USA) (NYSE:BCE). This group of stocks’ market valuations is closest to Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)’s market valuation.

As you can see, these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1.24 billion. That figure was $2.41 billion in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)’s case. CIGNA Corporation (NYSE:CI) is the most popular stock in this table. On the other hand, BCE Inc. (USA) (NYSE:BCE) is the least popular one with only 14 bullish hedge fund positions. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, CIGNA Corporation (NYSE:CI) might be a better candidate to consider a long position.