We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Biogen Inc. (NASDAQ:BIIB).
Is Biogen Inc. (NASDAQ:BIIB) the right investment to pursue these days? Money managers were getting more bullish. The number of bullish hedge fund bets moved up by 4 in recent months. Biogen Inc. (NASDAQ:BIIB) was in 67 hedge funds’ portfolios at the end of June. The all time high for this statistic is 81. Our calculations also showed that BIIB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Robert Pohly of Samlyn Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a look at the latest hedge fund action surrounding Biogen Inc. (NASDAQ:BIIB).
Do Hedge Funds Think BIIB Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BIIB over the last 24 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Biogen Inc. (NASDAQ:BIIB), which was worth $460.5 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $308 million worth of shares. D E Shaw, Marshall Wace LLP, and Sarissa Capital 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 Sarissa Capital Management allocated the biggest weight to Biogen Inc. (NASDAQ:BIIB), around 17.7% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, designating 7.61 percent of its 13F equity portfolio to BIIB.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Samlyn Capital, managed by Robert Pohly, initiated the biggest position in Biogen Inc. (NASDAQ:BIIB). Samlyn Capital had $130.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $64.7 million investment in the stock during the quarter. The other funds with brand new BIIB positions are Brandon Haley’s Holocene Advisors, Kamran Moghtaderi’s Eversept Partners, and Bill Miller’s Miller Value Partners.
Let’s now review hedge fund activity in other stocks similar to Biogen Inc. (NASDAQ:BIIB). We will take a look at Carvana Co. (NYSE:CVNA), ING Groep N.V. (NYSE:ING), UBS Group AG (NYSE:UBS), Relx PLC (NYSE:RELX), Roblox Corporation (NYSE:RBLX), Canadian Pacific Railway Limited (NYSE:CP), and Canadian Imperial Bank of Commerce (NYSE:CM). This group of stocks’ market values are similar to BIIB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVNA | 63 | 8904829 | -1 |
| ING | 9 | 601603 | -1 |
| UBS | 15 | 176356 | -1 |
| RELX | 6 | 58838 | 2 |
| RBLX | 49 | 4914667 | 3 |
| CP | 25 | 6353608 | -8 |
| CM | 15 | 382874 | 1 |
| Average | 26 | 3056111 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $3056 million. That figure was $3117 million in BIIB’s case. Carvana Co. (NYSE:CVNA) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Biogen Inc. (NASDAQ:BIIB) is more popular among hedge funds. Our overall hedge fund sentiment score for BIIB is 83.8. 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Unfortunately BIIB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BIIB were disappointed as the stock returned -23% since the end of the second quarter (through 10/29) 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 most of these stocks already outperformed the market since 2019.
Follow Biogen Inc. (NASDAQ:BIIB)
Follow Biogen Inc. (NASDAQ:BIIB)
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Disclosure: None. This article was originally published at Insider Monkey.
