We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards AstraZeneca plc (NASDAQ:AZN).
Is AZN stock a buy? AstraZeneca plc (NASDAQ:AZN) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. AstraZeneca plc (NASDAQ:AZN) was in 34 hedge funds’ portfolios at the end of March. The all time high for this statistic is 41. Our calculations also showed that AZN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Kris Jenner of Rock Springs Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to review the key hedge fund action encompassing AstraZeneca plc (NASDAQ:AZN).
Do Hedge Funds Think AZN Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AZN over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fisher Asset Management held the most valuable stake in AstraZeneca plc (NASDAQ:AZN), which was worth $914.3 million at the end of the fourth quarter. On the second spot was GQG Partners which amassed $766.2 million worth of shares. Point72 Asset Management, Arrowstreet Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to AstraZeneca plc (NASDAQ:AZN), around 3.91% of its 13F portfolio. Sphera Global Healthcare Fund is also relatively very bullish on the stock, designating 3.66 percent of its 13F equity portfolio to AZN.
Because AstraZeneca plc (NASDAQ:AZN) has experienced a decline in interest from hedge fund managers, logic holds that there were a few hedge funds who sold off their positions entirely heading into Q2. It’s worth mentioning that D. E. Shaw’s D E Shaw sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $213.8 million in stock, and Frank Brosens’s Taconic Capital was right behind this move, as the fund dropped about $26.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 7 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks similar to AstraZeneca plc (NASDAQ:AZN). These stocks are Starbucks Corporation (NASDAQ:SBUX), Caterpillar Inc. (NYSE:CAT), Anheuser-Busch InBev SA/NV (NYSE:BUD), Rio Tinto Group (NYSE:RIO), Sanofi (NASDAQ:SNY), The Charles Schwab Corporation (NYSE:SCHW), and Applied Materials, Inc. (NASDAQ:AMAT). This group of stocks’ market valuations are similar to AZN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBUX | 61 | 4442448 | -6 |
| CAT | 53 | 4956227 | 0 |
| BUD | 18 | 979916 | 0 |
| RIO | 25 | 1596509 | -1 |
| SNY | 15 | 1142178 | 0 |
| SCHW | 76 | 4905041 | 15 |
| AMAT | 78 | 5711193 | 17 |
| Average | 46.6 | 3390502 | 3.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.6 hedge funds with bullish positions and the average amount invested in these stocks was $3391 million. That figure was $2661 million in AZN’s case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand Sanofi (NASDAQ:SNY) is the least popular one with only 15 bullish hedge fund positions. AstraZeneca plc (NASDAQ: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 38. 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. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on AZN as the stock returned 19.4% since the end of the first quarter (through 6/25) and outperformed the market by an even larger margin.
Follow Astrazeneca Plc (NYSE:AZN)
Follow Astrazeneca Plc (NYSE:AZN)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- 15 Largest EPC Companies in the World
- 10 Extreme Dividend Stocks with Huge Upside
Disclosure: None. This article was originally published at Insider Monkey.
