Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Regeneron Pharmaceuticals Inc (NASDAQ:REGN) to find out whether there were any major changes in hedge funds’ views.
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) investors should be aware of an increase in activity from the world’s largest hedge funds recently. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was in 48 hedge funds’ portfolios at the end of June. The all time high for this statistic is 49. Our calculations also showed that REGN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Cathie Wood of ARK Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining 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. Keeping this in mind let’s take a peek at the new hedge fund action regarding Regeneron Pharmaceuticals Inc (NASDAQ:REGN).
Do Hedge Funds Think REGN Is A Good Stock To Buy Now?
At second quarter’s end, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the first quarter of 2020. On the other hand, there were a total of 49 hedge funds with a bullish position in REGN a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was held by ARK Investment Management, which reported holding $398.3 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $157.5 million position. Other investors bullish on the company included Healthcor Management LP, AQR Capital Management, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Tri Locum Partners allocated the biggest weight to Regeneron Pharmaceuticals Inc (NASDAQ:REGN), around 21.05% of its 13F portfolio. Bronte Capital is also relatively very bullish on the stock, setting aside 4.68 percent of its 13F equity portfolio to REGN.
Consequently, specific money managers were leading the bulls’ herd. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, created the most outsized position in Regeneron Pharmaceuticals Inc (NASDAQ:REGN). Healthcor Management LP had $106.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $105.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Charles Clough’s Clough Capital Partners, and Louis Bacon’s Moore Global Investments.
Let’s also examine hedge fund activity in other stocks similar to Regeneron Pharmaceuticals Inc (NASDAQ:REGN). These stocks are Dominion Energy Inc. (NYSE:D), Ford Motor Company (NYSE:F), ICICI Bank Limited (NYSE:IBN), Waste Management, Inc. (NYSE:WM), Eaton Corporation plc (NYSE:ETN), Workday Inc (NASDAQ:WDAY), and Itau Unibanco Holding SA (NYSE:ITUB). This group of stocks’ market caps are closest to REGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| D | 34 | 1262051 | -5 |
| F | 55 | 2106196 | 6 |
| IBN | 28 | 2473600 | -3 |
| WM | 39 | 3600334 | 7 |
| ETN | 40 | 1062179 | -9 |
| WDAY | 72 | 5187481 | 3 |
| ITUB | 16 | 431689 | 4 |
| Average | 40.6 | 2303361 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.6 hedge funds with bullish positions and the average amount invested in these stocks was $2303 million. That figure was $1595 million in REGN’s case. Workday Inc (NASDAQ:WDAY) is the most popular stock in this table. On the other hand Itau Unibanco Holding SA (NYSE:ITUB) is the least popular one with only 16 bullish hedge fund positions. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for REGN is 68. 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 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on REGN as the stock returned 9.5% since the end of Q2 (through 11/5) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)
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Disclosure: None. This article was originally published at Insider Monkey.
