Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about AbbVie Inc (NYSE:ABBV) in this article.
AbbVie Inc (NYSE:ABBV) shareholders have witnessed an increase in hedge fund sentiment in recent months. ABBV was in 71 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 68 hedge funds in our database with ABBV positions at the end of the previous quarter. Our calculations also showed that ABBV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are a lot of metrics investors use to value stocks. A duo of the less known metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the market by a healthy amount (see the details here).
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now let’s take a look at the recent hedge fund action regarding AbbVie Inc (NYSE:ABBV).
What does smart money think about AbbVie Inc (NYSE:ABBV)?
At the end of the foruth quarter, a total of 71 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ABBV over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Orbis Investment Management held the most valuable stake in AbbVie Inc (NYSE:ABBV), which was worth $1425.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $1044.5 million worth of shares. Two Sigma Advisors, Arrowstreet Capital, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to AbbVie Inc (NYSE:ABBV), around 13.03% of its 13F portfolio. Orbis Investment Management is also relatively very bullish on the stock, setting aside 9.95 percent of its 13F equity portfolio to ABBV.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Partner Fund Management, managed by Christopher James, assembled the most outsized position in AbbVie Inc (NYSE:ABBV). Partner Fund Management had $14.7 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $8.6 million position during the quarter. The other funds with brand new ABBV positions are Bhagwan Jay Rao’s Integral Health Asset Management, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Ken Heebner’s Capital Growth Management.
Let’s go over hedge fund activity in other stocks similar to AbbVie Inc (NYSE:ABBV). We will take a look at AstraZeneca plc (NYSE:AZN), Thermo Fisher Scientific Inc. (NYSE:TMO), Costco Wholesale Corporation (NASDAQ:COST), and United Technologies Corporation (NYSE:UTX). This group of stocks’ market values resemble ABBV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AZN | 32 | 1901127 | 4 |
| TMO | 73 | 3607687 | 3 |
| COST | 70 | 4401660 | 7 |
| UTX | 81 | 7021856 | 7 |
| Average | 64 | 4233083 | 5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 64 hedge funds with bullish positions and the average amount invested in these stocks was $4233 million. That figure was $5288 million in ABBV’s case. United Technologies Corporation (NYSE:UTX) is the most popular stock in this table. On the other hand AstraZeneca plc (NYSE:AZN) is the least popular one with only 32 bullish hedge fund positions. AbbVie Inc (NYSE:ABBV) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Hedge funds were also right about betting on ABBV as the stock returned 1.5% during the first quarter (through March 2nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
