Is Incyte Corporation (INCY) A Good Stock To Buy?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Incyte Corporation (NASDAQ:INCY), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Incyte Corporation (NASDAQ:INCY) shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. 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 Sirius XM Radio Inc (NASDAQ:SIRI), KKR & Co. L.P. (NYSE:KKR), and Mylan NV (NASDAQ:MYL) to gather more data points.

According to most traders, hedge funds are viewed as slow, old financial tools of the past. While there are more than 8000 funds trading today, We hone in on the moguls of this club, approximately 700 funds. These money managers have their hands on most of all hedge funds’ total asset base, and by watching their matchless stock picks, Insider Monkey has brought to light a few investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, we’re going to take a look at the new action encompassing Incyte Corporation (NASDAQ:INCY).

What have hedge funds been doing with Incyte Corporation (NASDAQ:INCY)?

At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 14% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the biggest position in Incyte Corporation (NASDAQ:INCY), worth close to $2.15 billion, accounting for 19.9% of its total 13F portfolio. The second most bullish fund manager is OrbiMed Advisors, managed by Samuel Isaly, which holds a $302.4 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions encompass John Overdeck and David Siegel’s Two Sigma Advisors, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Jeremy Green’s Redmile Group.

As one would reasonably expect, specific money managers have jumped into Incyte Corporation (NASDAQ:INCY) headfirst. Millennium Management, managed by Israel Englander, initiated the most valuable call position in Incyte Corporation (NASDAQ:INCY). Millennium Management had $55.2 million invested in the company at the end of the quarter. John Burbank’s Passport Capital also made a $34.2 million investment in the stock during the quarter. The following funds were also among the new INCY investors: Richard Chilton’s Chilton Investment Company, Clifford Fox’s Columbus Circle Investors, and Paul Sinclair’s Blue Jay Capital Management.

Let’s go over hedge fund activity in other stocks similar to Incyte Corporation (NASDAQ:INCY). We will take a look at Sirius XM Radio Inc (NASDAQ:SIRI), KKR & Co. L.P. (NYSE:KKR), Mylan Inc. (NASDAQ:MYL), and Ross Stores, Inc. (NASDAQ:ROST). This group of stocks’ market caps matches Incyte Corporation (NASDAQ:INCY)’s market cap.

As you can see, these stocks had an average of 45 hedge funds with bullish positions and the average amount invested in these stocks was $1.43 billion. That figure was $3.23 billion in Incyte Corporation (NASDAQ:INCY)’s case. Mylan Inc. (NASDAQ:MYL) is the most popular stock in this table. On the other hand, KKR & Co. L.P. (NYSE:KKR) is the least popular one with only 30 bullish hedge fund positions. Incyte Corporation (NASDAQ:INCY) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Mylan Inc. (NASDAQ:MYL) might be a better candidate to consider a long position.