Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) and see how the stock is affected by the recent hedge fund activity.
Is BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) a bargain? Investors who are in the know are buying. The number of bullish hedge fund positions advanced by 1 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Hormel Foods Corporation (NYSE:HRL), Sigma-Aldrich Corporation (NASDAQ:SIAL), and Smith & Nephew plc (ADR) (NYSE:SNN) to gather more data points.
Follow Biomarin Pharmaceutical Inc (NASDAQ:BMRN)
Follow Biomarin Pharmaceutical Inc (NASDAQ:BMRN)
In today’s marketplace there are a large number of indicators stock market investors use to evaluate their holdings. A duo of the most under-the-radar indicators are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite investment managers can outperform the market by a significant margin (see the details here).
Keeping this in mind, we’re going to take a look at the latest action surrounding BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
What have hedge funds been doing with BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)?
At the end of the third quarter, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the largest position in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), worth close to $429.3 million, corresponding to 4% of its total 13F portfolio. The second most bullish fund manager is William Leland Edwards of Palo Alto Investors, with a $175.5 million position; the fund has 8.4% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish contain John Griffin’s Blue Ridge Capital, Paul Orlin and Alex Porter’s Amici Capital and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.
Consequently, key hedge funds were breaking ground themselves. Tourbillon Capital Partners, managed by Jason Karp, created the most valuable call position in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). Tourbillon Capital Partners had $21.1 million invested in the company at the end of the quarter. Hal Mintz’s Sabby Capital also made a $18.3 million investment in the stock during the quarter. The other funds with brand new BMRN positions are David Lamond’s Lamond Capital Partners, Matthew Tewksbury’s Stevens Capital Management, and Brad Farber’s Atika Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) but similarly valued. These stocks are Hormel Foods Corporation (NYSE:HRL), Sigma-Aldrich Corporation (NASDAQ:SIAL), Smith & Nephew plc (ADR) (NYSE:SNN), and Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG). This group of stocks’ market values resemble BMRN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HRL | 15 | 192187 | -6 |
| SIAL | 34 | 1572116 | -3 |
| SNN | 14 | 158598 | -7 |
| SHG | 5 | 6730 | -3 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $482 million. That figure was $1742 million in BMRN’s case. Sigma-Aldrich Corporation (NASDAQ:SIAL) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
