How do you pick the next stock to invest in? One way would be to spend days 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 Pfizer Inc. (NYSE:PFE).
Pfizer Inc. (NYSE:PFE) shareholders have witnessed an increase in enthusiasm from smart money lately. Pfizer Inc. (NYSE:PFE) was in 67 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 119. Our calculations also showed that PFE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the eyes of most traders, hedge funds are seen as unimportant, old financial vehicles of yesteryear. While there are greater than 8000 funds in operation at present, Our researchers hone in on the top tier of this group, about 850 funds. These hedge fund managers orchestrate bulk of the smart money’s total asset base, and by keeping an eye on their top stock picks, Insider Monkey has brought to light various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .
Henrik Rhenman of Rhenman & Partners Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a glance at the new hedge fund action regarding Pfizer Inc. (NYSE:PFE).
Do Hedge Funds Think PFE Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PFE over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Pfizer Inc. (NYSE:PFE) was held by Diamond Hill Capital, which reported holding $457.4 million worth of stock at the end of June. It was followed by Two Sigma Advisors with a $422.4 million position. Other investors bullish on the company included Citadel Investment Group, D E Shaw, and AQR Capital Management. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to Pfizer Inc. (NYSE:PFE), around 7.8% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, dishing out 5.54 percent of its 13F equity portfolio to PFE.
Consequently, key money managers were leading the bulls’ herd. Renaissance Technologies, created the most valuable position in Pfizer Inc. (NYSE:PFE). Renaissance Technologies had $92.6 million invested in the company at the end of the quarter. Stephen DuBois’s Camber Capital Management also made a $78.3 million investment in the stock during the quarter. The following funds were also among the new PFE investors: Henrik Rhenman’s Rhenman & Partners Asset Management, Andrew Weiss’s Weiss Asset Management, and Prashanth Jayaram’s Tri Locum Partners.
Let’s go over hedge fund activity in other stocks similar to Pfizer Inc. (NYSE:PFE). These stocks are Oracle Corporation (NASDAQ:ORCL), Abbott Laboratories (NYSE:ABT), AT&T Inc. (NYSE:T), Novartis AG (NYSE:NVS), PepsiCo, Inc. (NYSE:PEP), Chevron Corporation (NYSE:CVX), and AbbVie Inc (NYSE:ABBV). This group of stocks’ market valuations are similar to PFE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORCL | 55 | 2889687 | 3 |
| ABT | 61 | 4367607 | -4 |
| T | 68 | 2896412 | 5 |
| NVS | 22 | 1798368 | 3 |
| PEP | 66 | 5193638 | 5 |
| CVX | 50 | 4272637 | 9 |
| ABBV | 82 | 5351277 | 10 |
| Average | 57.7 | 3824232 | 4.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 57.7 hedge funds with bullish positions and the average amount invested in these stocks was $3824 million. That figure was $2357 million in PFE’s case. AbbVie Inc (NYSE:ABBV) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 bullish hedge fund positions. Pfizer Inc. (NYSE:PFE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PFE is 61.4. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Hedge funds were also right about betting on PFE as the stock returned 12.3% since the end of Q2 (through 9/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Pfizer Inc (NYSE:PFE)
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Disclosure: None. This article was originally published at Insider Monkey.
