Hedge funds are not perfect. They have their bad picks just like everyone else. Valeant, a stock hedge funds have loved, lost 79% during the last 12 months ending in November 21. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 mid-cap stocks among the best performing hedge funds yielded an average return of 18% in the same time period, vs. a gain of 7.6% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think.
In this article, we will analyze what smart money investors think of Allergan, Inc. (NYSE:AGN). In addition, at the end of this article, we will compare AGN to other stocks including Walgreens Boots Alliance Inc (NASDAQ:WBA), Honeywell International Inc. (NYSE:HON), and Royal Bank of Canada (USA) (NYSE:RY) to get a better sense of its popularity.
Follow Allergan Inc (NYSE:AGN)
Follow Allergan Inc (NYSE:AGN)
In the 21st century investor’s toolkit there are tons of metrics stock traders have at their disposal to analyze their holdings. A duo of the best metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top money managers can outclass their index-focused peers by a healthy amount (see the details here).
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With all of this in mind, let’s check out the new action encompassing Allergan, Inc. (NYSE:AGN).
What have hedge funds been doing with Allergan, Inc. (NYSE:AGN)?
A total of 115 funds tracked by Insider Monkey held shares of Allergan, down by 12% compared to the end of June. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Paulson & Co, managed by John Paulson, holds the number one position in Allergan, Inc. (NYSE:AGN), which is worth $896.2 million as of the end of September, comprising 9.7% of its 13F portfolio. On Paulson & Co’s heels is Third Point, managed by Dan Loeb, which holds a $871.7 million position; 7.6% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism include Paul Singer’s Elliott Management, and Seth Klarman’s Baupost Group.
Judging by the fact that Allergan, Inc. (NYSE:AGN) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers that elected to cut their entire stakes by the end of the third quarter. It’s worth mentioning that Andreas Halvorsen’s Viking Global sold off the biggest position of the 700 funds followed by Insider Monkey, comprising close to $448.2 million in stock, and Lee Ainslie’s Maverick Capital was right behind this move, as the fund said goodbye to about $203 million worth of shares. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 16 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Allergan, Inc. (NYSE:AGN) but similarly valued. We will take a look at Walgreens Boots Alliance Inc (NASDAQ:WBA), Honeywell International Inc. (NYSE:HON), Royal Bank of Canada (USA) (NYSE:RY), and Ambev SA (ADR) (NYSE:ABEV). This group of stocks’ market caps match AGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WBA | 60 | 3125492 | -7 |
| HON | 48 | 1612992 | 0 |
| RY | 17 | 455517 | 0 |
| ABEV | 17 | 422804 | -4 |
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1.40 billion. By comparison, hedge funds amassed $10.59 billion worth of Allergan’s stock. Walgreens Boots Alliance Inc (NASDAQ:WBA) is the most popular stock in this table, while Royal Bank of Canada (USA) (NYSE:RY) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Allergan, Inc. (NYSE:AGN) 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.
