Was The Smart Money Right About Alnylam Pharmaceuticals, Inc. (ALNY)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) and determine whether the smart money was really smart about this stock.

Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) was in 40 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ALNY has seen an increase in hedge fund sentiment lately. There were 33 hedge funds in our database with ALNY holdings at the end of June. Our calculations also showed that ALNY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a peek at the key hedge fund action encompassing Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).

Paul Marshall of Marshall Wace

Do Hedge Funds Think ALNY Is A Good Stock To Buy Now?

At the end of September, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the second quarter of 2021. On the other hand, there were a total of 35 hedge funds with a bullish position in ALNY a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Among these funds, Casdin Capital held the most valuable stake in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), which was worth $188.8 million at the end of the third quarter. On the second spot was Avoro Capital Advisors (venBio Select Advisor) which amassed $160.5 million worth of shares. Farallon Capital, Holocene Advisors, and Holocene Advisors 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 Casdin Capital allocated the biggest weight to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), around 4.7% of its 13F portfolio. Parkman Healthcare Partners is also relatively very bullish on the stock, setting aside 3.58 percent of its 13F equity portfolio to ALNY.

As industrywide interest jumped, key money managers have been driving this bullishness. Atika Capital, managed by Brad Farber, established the most valuable position in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). Atika Capital had $12.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $5.3 million investment in the stock during the quarter. The following funds were also among the new ALNY investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Zach Schreiber’s Point State Capital, and Arthur B Cohen and Joseph Healey’s Healthcor Management LP.

Let’s now take a look at hedge fund activity in other stocks similar to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). These stocks are Dover Corporation (NYSE:DOV), Zillow Group Inc (NASDAQ:Z), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Xylem Inc (NYSE:XYL), Hormel Foods Corporation (NYSE:HRL), Imperial Oil Limited (NYSE:IMO), and Bio-Rad Laboratories, Inc. (NYSE:BIO). This group of stocks’ market valuations resemble ALNY’s market valuation.

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As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $1177 million. That figure was $1030 million in ALNY’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Imperial Oil Limited (NYSE:IMO) is the least popular one with only 10 bullish hedge fund positions. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALNY is 66.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, ALNY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ALNY were disappointed as the stock returned -27.1% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.