Were Hedge Funds Right About Amgen, Inc. (AMGN)?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Amgen, Inc. (NASDAQ:AMGN).

Amgen, Inc. (NASDAQ:AMGN) investors should be aware of an increase in support from the world’s most elite money managers recently. Amgen, Inc. (NASDAQ:AMGN) was in 53 hedge funds’ portfolios at the end of June. 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 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. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Larry Robbins of Glenview Capital

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. With all of this in mind let’s take a gander at the key hedge fund action encompassing Amgen, Inc. (NASDAQ:AMGN).

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

At Q2’s end, a total of 53 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the first quarter of 2020. By comparison, 51 hedge funds held shares or bullish call options in AMGN a year ago. 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 Amgen, Inc. (NASDAQ:AMGN) was held by Two Sigma Advisors, which reported holding $312.1 million worth of stock at the end of June. It was followed by AQR Capital Management with a $291.4 million position. Other investors bullish on the company included D E Shaw, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position L2 Asset Management allocated the biggest weight to Amgen, Inc. (NASDAQ:AMGN), around 2.27% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, dishing out 2.12 percent of its 13F equity portfolio to AMGN.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Amgen, Inc. (NASDAQ:AMGN). Arrowstreet Capital had $176.4 million invested in the company at the end of the quarter. Arthur B Cohen and Joseph Healey’s Healthcor Management LP also initiated a $38.6 million position during the quarter. The following funds were also among the new AMGN investors: Larry Robbins’s Glenview Capital, Michael Castor’s Sio Capital, and Andrew Weiss’s Weiss Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Amgen, Inc. (NASDAQ:AMGN) but similarly valued. We will take a look at The Charles Schwab Corporation (NYSE:SCHW), Lowe’s Companies, Inc. (NYSE:LOW), Rio Tinto Group (NYSE:RIO), HDFC Bank Limited (NYSE:HDB), Intuit Inc. (NASDAQ:INTU), BlackRock, Inc. (NYSE:BLK), and American Express Company (NYSE:AXP). This group of stocks’ market valuations are closest to AMGN’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 51.4 hedge funds with bullish positions and the average amount invested in these stocks was $6900 million. That figure was $1652 million in AMGN’s case. The Charles Schwab Corporation (NYSE:SCHW) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 21 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 63.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 3.1 percentage points. Unfortunately AMGN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AMGN were disappointed as the stock returned -11.6% since the end of June (through 11/5) 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 many of these stocks already outperformed the market since 2019.

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

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