Was The Smart Money Right About Gilead Sciences, Inc. (GILD)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Gilead Sciences, Inc. (NASDAQ:GILD) based on those filings.

Is Gilead Sciences, Inc. (NASDAQ:GILD) a bargain? Prominent investors were taking a bullish view. The number of bullish hedge fund bets improved by 11 recently. Gilead Sciences, Inc. (NASDAQ:GILD) was in 72 hedge funds’ portfolios at the end of December. The all time high for this statistic is 93. Our calculations also showed that GILD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

John Rogers of Ariel Investments

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. Keeping this in mind let’s check out the new hedge fund action surrounding Gilead Sciences, Inc. (NASDAQ:GILD).

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

At fourth quarter’s end, a total of 72 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GILD over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Gilead Sciences, Inc. (NASDAQ:GILD), with a stake worth $371.4 million reported as of the end of December. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $233.1 million. Arrowstreet Capital, Ariel Investments, and AQR 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 Healthcare Value Capital allocated the biggest weight to Gilead Sciences, Inc. (NASDAQ:GILD), around 9.81% of its 13F portfolio. Unio Capital is also relatively very bullish on the stock, earmarking 3.99 percent of its 13F equity portfolio to GILD.

As aggregate interest increased, key money managers were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, established the largest position in Gilead Sciences, Inc. (NASDAQ:GILD). Holocene Advisors had $71.4 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $35.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Nicholas Bagnall’s Te Ahumairangi Investment Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Michael Kharitonov and Jon David McAuliffe’s Voleon Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Gilead Sciences, Inc. (NASDAQ:GILD) but similarly valued. We will take a look at Becton, Dickinson and Company (NYSE:BDX), KE Holdings Inc (NYSE:BEKE), Infosys Limited (NYSE:INFY), Activision Blizzard, Inc. (NASDAQ:ATVI), China Petroleum & Chemical Corp (NYSE:SNP), U.S. Bancorp (NYSE:USB), and Chubb Limited (NYSE:CB). All of these stocks’ market caps are similar to GILD’s market cap.

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As you can see these stocks had an average of 43.7 hedge funds with bullish positions and the average amount invested in these stocks was $3002 million. That figure was $2022 million in GILD’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 13 bullish hedge fund positions. Gilead Sciences, Inc. (NASDAQ:GILD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GILD is 76.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on GILD as the stock returned 14.5% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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