Should You Buy AstraZeneca plc (ADR) (AZN)?

Is AstraZeneca plc (ADR) (NYSE:AZN) a healthy stock for your portfolio? Investors who are in the know are getting more bullish. The number of long hedge fund bets went up by 7 recently.

In the eyes of most traders, hedge funds are perceived as unimportant, outdated investment vehicles of years past. While there are over 8000 funds trading at the moment, we at Insider Monkey hone in on the leaders of this group, around 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total capital, and by tracking their top equity investments, we have uncovered a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as integral, bullish insider trading activity is a second way to break down the financial markets. Just as you’d expect, there are a number of incentives for an upper level exec to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this method if investors understand where to look (learn more here).

Keeping this in mind, it’s important to take a look at the key action surrounding AstraZeneca plc (ADR) (NYSE:AZN).

What does the smart money think about AstraZeneca plc (ADR) (NYSE:AZN)?

In preparation for this quarter, a total of 20 of the hedge funds we track were bullish in this stock, a change of 54% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Jim Simons’s Renaissance Technologies had the largest position in AstraZeneca plc (ADR) (NYSE:AZN), worth close to $181.3 million, comprising 0.4% of its total 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $166 million position; 1.3% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Stephen DuBois’s Camber Capital Management, Jeremy Green’s Redmile Group and John Overdeck and David Siegel’s Two Sigma Advisors.

As one would reasonably expect, key money managers were breaking ground themselves. Camber Capital Management, managed by Stephen DuBois, assembled the most valuable call position in AstraZeneca plc (ADR) (NYSE:AZN). Camber Capital Management had 50 million invested in the company at the end of the quarter. Jeremy Green’s Redmile Group also initiated a $12.6 million position during the quarter. The following funds were also among the new AZN investors: Israel Englander’s Catapult Capital Management, Neil Chriss’s Hutchin Hill Capital, and Barton Biggs’s Traxis Partners.

How have insiders been trading AstraZeneca plc (ADR) (NYSE:AZN)?

Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past 180 days. Over the latest 180-day time period, AstraZeneca plc (ADR) (NYSE:AZN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to AstraZeneca plc (ADR) (NYSE:AZN). These stocks are Merck & Co., Inc. (NYSE:MRK), GlaxoSmithKline plc (ADR) (NYSE:GSK), Bristol Myers Squibb Co. (NYSE:BMY), AbbVie Inc (NYSE:ABBV), and Eli Lilly & Co. (NYSE:LLY). All of these stocks are in the drug manufacturers – major industry and their market caps resemble AZN’s market cap.