Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN).
Hedge fund interest in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ALXN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare ALXN to other stocks including Hilton Worldwide Holdings Inc (NYSE:HLT), Corning Incorporated (NYSE:GLW), and Zimmer Biomet Holdings Inc (NYSE:ZBH) to get a better sense of its popularity.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Now we’re going to check out the latest hedge fund action encompassing Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN).
Do Hedge Funds Think ALXN Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 77 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ALXN over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) was held by Pentwater Capital Management, which reported holding $655.9 million worth of stock at the end of December. It was followed by Adage Capital Management with a $648.7 million position. Other investors bullish on the company included Baker Bros. Advisors, Renaissance Technologies, and Millennium Management. In terms of the portfolio weights assigned to each position Twin Capital Management allocated the biggest weight to Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), around 22.46% of its 13F portfolio. Sand Grove Capital Partners is also relatively very bullish on the stock, earmarking 15.91 percent of its 13F equity portfolio to ALXN.
Judging by the fact that Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few money managers that decided to sell off their entire stakes by the end of the first quarter. It’s worth mentioning that Stephen DuBois’s Camber Capital Management dropped the largest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $183.6 million in stock. David Cohen and Harold Levy’s fund, Iridian Asset Management, also said goodbye to its stock, about $102.6 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) but similarly valued. We will take a look at Hilton Worldwide Holdings Inc (NYSE:HLT), Corning Incorporated (NYSE:GLW), Zimmer Biomet Holdings Inc (NYSE:ZBH), Peloton Interactive, Inc. (NASDAQ:PTON), Marvell Technology Group Ltd. (NASDAQ:MRVL), Orange SA (NYSE:ORAN), and The Hershey Company (NYSE:HSY). All of these stocks’ market caps are closest to ALXN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLT | 47 | 5139343 | -13 |
| GLW | 32 | 507110 | -7 |
| ZBH | 50 | 2151143 | -3 |
| PTON | 64 | 3963327 | 1 |
| MRVL | 33 | 683159 | -7 |
| ORAN | 2 | 10613 | -1 |
| HSY | 42 | 1267940 | 3 |
| Average | 38.6 | 1960376 | -3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $1960 million. That figure was $6915 million in ALXN’s case. Peloton Interactive, Inc. (NASDAQ:PTON) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is more popular among hedge funds. Our overall hedge fund sentiment score for ALXN is 85. 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 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Unfortunately ALXN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ALXN were disappointed as the stock returned -100% since the end of the first quarter (through 8/6) 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 Alexion Pharmaceuticals Inc. (NASDAQ:ALXN)
Follow Alexion Pharmaceuticals Inc. (NASDAQ:ALXN)
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Disclosure: None. This article was originally published at Insider Monkey.
