Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Opko Health Inc. (NYSE:OPK).
Opko Health Inc. (NYSE:OPK) investors should pay attention to a decrease in activity from the world’s largest hedge funds 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 ABIOMED, Inc. (NASDAQ:ABMD), Bright Horizons Family Solutions Inc (NYSE:BFAM), and Eaton Vance Corp (NYSE:EV) to gather more data points.
Follow Opko Health Inc. (NYSE:OPK)
Follow Opko Health Inc. (NYSE:OPK)
At the moment, there are several tools shareholders put to use to appraise their stock investments. Two of the most innovative tools are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite investment managers can outclass their index-focused peers by a healthy margin (see the details here).
With all of this in mind, we’re going to take a peek at the recent action surrounding Opko Health Inc. (NYSE:OPK).
What does the smart money think about Opko Health Inc. (NYSE:OPK)?
At the end of September, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 20% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Tang Capital Management, managed by Kevin C. Tang, holds the biggest position in Opko Health Inc. (NYSE:OPK). Tang Capital Management has a $20.8 million position in the stock, comprising 7.7% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which holds a $13.3 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions encompass Ken Griffin’s Citadel Investment Group, D E Shaw, and Hal Mintz’s Sabby Capital.
Seeing as Opko Health Inc. (NYSE:OPK) has experienced a declining sentiment from the smart money, logic holds that there lies a certain “tier” of hedge funds that decided to sell off their full holdings by the end of the third quarter. It’s worth mentioning that Renaissance Technologies dropped the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $30.7 million in stock, and Robert Emil Zoellner’s Alpine Associates was right behind this move, as the fund dropped about $13.8 million worth of shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 6 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Opko Health Inc. (NYSE:OPK). These stocks are ABIOMED, Inc. (NASDAQ:ABMD), Bright Horizons Family Solutions Inc (NYSE:BFAM), Eaton Vance Corp (NYSE:EV), and West Pharmaceutical Services Inc. (NYSE:WST). This group of stocks’ market values matches Opko Health Inc. (NYSE:OPK)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABMD | 22 | 433826 | -7 |
| BFAM | 15 | 189535 | 4 |
| EV | 13 | 86390 | -1 |
| WST | 10 | 139679 | 5 |
As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $94 million in Opko Health Inc. (NYSE:OPK)’s case. ABIOMED, Inc. (NASDAQ:ABMD) is the most popular stock in this table. On the other hand, West Pharmaceutical Services Inc. (NYSE:WST) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks, Opko Health Inc. (NYSE:OPK) 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.
