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 BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
Is BMRN a good stock to buy? BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 44 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that BMRN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare BMRN to other stocks including PTC Inc (NASDAQ:PTC), Cardinal Health, Inc. (NYSE:CAH), and Clarivate Plc (NYSE:CLVT) to get a better sense of its popularity.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind let’s go over the latest hedge fund action encompassing BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
Do Hedge Funds Think BMRN Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2021. On the other hand, there were a total of 44 hedge funds with a bullish position in BMRN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Baker Bros. Advisors held the most valuable stake in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), which was worth $589 million at the end of the third quarter. On the second spot was Palo Alto Investors which amassed $171 million worth of shares. Avoro Capital Advisors (venBio Select Advisor), Camber Capital Management, 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 Palo Alto Investors allocated the biggest weight to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), around 10.32% of its 13F portfolio. Copernicus Capital Management is also relatively very bullish on the stock, dishing out 10.29 percent of its 13F equity portfolio to BMRN.
Seeing as BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds that slashed their entire stakes in the third quarter. At the top of the heap, Benjamin A. Smith’s Laurion Capital Management sold off the largest stake of all the hedgies monitored by Insider Monkey, valued at close to $31.7 million in stock. Steve Zheng’s fund, Deepcurrents Investment Group, also dropped its stock, about $4.6 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). We will take a look at PTC Inc (NASDAQ:PTC), Cardinal Health, Inc. (NYSE:CAH), Clarivate Plc (NYSE:CLVT), Alliant Energy Corporation (NYSE:LNT), Zendesk Inc (NYSE:ZEN), News Corp (NASDAQ:NWSA), and Loews Corporation (NYSE:L). This group of stocks’ market valuations are closest to BMRN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PTC | 37 | 1819643 | 6 |
| CAH | 36 | 664971 | -4 |
| CLVT | 32 | 4723546 | -9 |
| LNT | 17 | 76693 | 1 |
| ZEN | 53 | 1557704 | 1 |
| NWSA | 34 | 737689 | -3 |
| L | 27 | 175121 | -1 |
| Average | 33.7 | 1393624 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.7 hedge funds with bullish positions and the average amount invested in these stocks was $1394 million. That figure was $1441 million in BMRN’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Alliant Energy Corporation (NYSE:LNT) is the least popular one with only 17 bullish hedge fund positions. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BMRN is 66.9. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on BMRN as the stock returned 11.6% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Biomarin Pharmaceutical Inc (NASDAQ:BMRN)
Follow Biomarin Pharmaceutical Inc (NASDAQ:BMRN)
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Disclosure: None. This article was originally published at Insider Monkey.
