The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtBeiGene, Ltd. (NASDAQ:BGNE) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is BeiGene, Ltd. (NASDAQ:BGNE) a buy, sell, or hold? The smart money was taking a bearish view. The number of bullish hedge fund positions retreated by 5 recently. Our calculations also showed that BGNE 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). BGNE was in 11 hedge funds’ portfolios at the end of March. There were 16 hedge funds in our database with BGNE holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Lei Zhang of Hillhouse Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the latest hedge fund action encompassing BeiGene, Ltd. (NASDAQ:BGNE).
How have hedgies been trading BeiGene, Ltd. (NASDAQ:BGNE)?
At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in BGNE over the last 18 quarters. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Baker Bros. Advisors was the largest shareholder of BeiGene, Ltd. (NASDAQ:BGNE), with a stake worth $1449.9 million reported as of the end of September. Trailing Baker Bros. Advisors was Hillhouse Capital Management, which amassed a stake valued at $673.7 million. Rock Springs Capital Management, Indus Capital, and Millennium Management 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 Hillhouse Capital Management allocated the biggest weight to BeiGene, Ltd. (NASDAQ:BGNE), around 9.08% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, dishing out 8.93 percent of its 13F equity portfolio to BGNE.
Judging by the fact that BeiGene, Ltd. (NASDAQ:BGNE) has faced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of funds who sold off their positions entirely heading into Q4. Intriguingly, Israel Englander’s Millennium Management cut the largest position of all the hedgies followed by Insider Monkey, worth about $11.8 million in stock, and Yi Xin’s Ariose Capital was right behind this move, as the fund said goodbye to about $8.5 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 5 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BeiGene, Ltd. (NASDAQ:BGNE) but similarly valued. These stocks are Qiagen NV (NASDAQ:QGEN), NVR, Inc. (NYSE:NVR), Open Text Corporation (NASDAQ:OTEX), and ArcelorMittal (NYSE:MT). This group of stocks’ market caps match BGNE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QGEN | 30 | 341681 | -21 |
| NVR | 34 | 744980 | 4 |
| OTEX | 18 | 376098 | 4 |
| MT | 13 | 123110 | -4 |
| Average | 23.75 | 396467 | -4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $396 million. That figure was $2174 million in BGNE’s case. NVR, Inc. (NYSE:NVR) is the most popular stock in this table. On the other hand ArcelorMittal (NYSE:MT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks BeiGene, Ltd. (NASDAQ:BGNE) is even less popular than MT. Hedge funds clearly dropped the ball on BGNE as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on BGNE as the stock returned 53% in 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.
