How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Biogen Inc. (NASDAQ:BIIB).
Biogen Inc. (NASDAQ:BIIB) was in 57 hedge funds’ portfolios at the end of December. BIIB investors should be aware of an increase in hedge fund interest lately. There were 56 hedge funds in our database with BIIB positions at the end of the previous quarter. Our calculations also showed that BIIB isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a gander at the latest hedge fund action surrounding Biogen Inc. (NASDAQ:BIIB).
What does the smart money think about Biogen Inc. (NASDAQ:BIIB)?
At the end of the fourth quarter, a total of 57 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BIIB over the last 14 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in Biogen Inc. (NASDAQ:BIIB), worth close to $949.7 million, accounting for 1.1% of its total 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $458.6 million position; 1.2% of its 13F portfolio is allocated to the stock. Other peers that are bullish contain Jim Simons’s Renaissance Technologies, Samuel Isaly’s OrbiMed Advisors and Alex Denner’s Sarissa Capital Management.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Voleon Capital, managed by Michael Kharitonov and Jon David McAuliffe, created the most outsized position in Biogen Inc. (NASDAQ:BIIB). Voleon Capital had $23.2 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made a $10.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management, Michael Burry’s Scion Asset Management, and Minhua Zhang’s Weld Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Biogen Inc. (NASDAQ:BIIB) but similarly valued. These stocks are Westpac Banking Corporation (NYSE:WBK), Chubb Limited (NYSE:CB), China Life Insurance Company Ltd. (NYSE:LFC), and Fox Corporation (NASDAQ:FOXA). All of these stocks’ market caps are similar to BIIB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WBK | 10 | 44437 | 4 |
| CB | 24 | 623211 | -6 |
| LFC | 7 | 40799 | -3 |
| FOXA | 70 | 9864640 | -3 |
| Average | 27.75 | 2643272 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $2643 million. That figure was $3240 million in BIIB’s case. Fox Corporation (NASDAQ:FOXA) is the most popular stock in this table. On the other hand China Life Insurance Company Ltd. (NYSE:LFC) is the least popular one with only 7 bullish hedge fund positions. Biogen Inc. (NASDAQ:BIIB) 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately Biogen wasn’t in this group. Hedge funds that bet on Biogen were disappointed as the stock returned 9.6% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
