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 Amgen, Inc. (NASDAQ:AMGN) and determine whether hedge funds had an edge regarding this stock.
Amgen, Inc. (NASDAQ:AMGN) has experienced a decrease in enthusiasm from smart money recently. Amgen, Inc. (NASDAQ:AMGN) was in 52 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 73. Our calculations also showed that AMGN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Sander Gerber of Hudson Bay Capital
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 check out the fresh hedge fund action regarding Amgen, Inc. (NASDAQ:AMGN).
Do Hedge Funds Think AMGN Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AMGN over the last 25 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Two Sigma Advisors was the largest shareholder of Amgen, Inc. (NASDAQ:AMGN), with a stake worth $393.9 million reported as of the end of September. Trailing Two Sigma Advisors was D E Shaw, which amassed a stake valued at $267.1 million. AQR Capital Management, Citadel Investment Group, and Pzena Investment Management 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 L2 Asset Management allocated the biggest weight to Amgen, Inc. (NASDAQ:AMGN), around 2.56% of its 13F portfolio. Arjuna Capital is also relatively very bullish on the stock, setting aside 1.78 percent of its 13F equity portfolio to AMGN.
Since Amgen, Inc. (NASDAQ:AMGN) has faced bearish sentiment from the smart money, logic holds that there exists a select few hedge funds that slashed their entire stakes last quarter. It’s worth mentioning that Arthur B Cohen and Joseph Healey’s Healthcor Management LP cut the biggest position of the 750 funds tracked by Insider Monkey, valued at close to $38.6 million in stock. Michael Castor’s fund, Sio Capital, also sold off its stock, about $8.5 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Amgen, Inc. (NASDAQ:AMGN). These stocks are Toronto-Dominion Bank (NYSE:TD), Intuitive Surgical, Inc. (NASDAQ:ISRG), Snap Inc. (NYSE:SNAP), Applied Materials, Inc. (NASDAQ:AMAT), Pinduoduo Inc. (NASDAQ:PDD), General Electric Company (NYSE:GE), and Diageo plc (NYSE:DEO). This group of stocks’ market caps resemble AMGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TD | 17 | 294336 | 0 |
| ISRG | 61 | 3536259 | 1 |
| SNAP | 78 | 6739225 | 14 |
| AMAT | 68 | 4320480 | -5 |
| PDD | 49 | 3538156 | 0 |
| GE | 53 | 6244560 | -14 |
| DEO | 18 | 703948 | -2 |
| Average | 49.1 | 3625281 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 49.1 hedge funds with bullish positions and the average amount invested in these stocks was $3625 million. That figure was $1448 million in AMGN’s case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand Toronto-Dominion Bank (NYSE:TD) is the least popular one with only 17 bullish hedge fund positions. Amgen, Inc. (NASDAQ:AMGN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMGN is 54.1. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on AMGN as the stock returned 7.7% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
