Were Hedge Funds Right About Biogen Inc. (BIIB)?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Biogen Inc. (NASDAQ:BIIB)? The smart money sentiment can provide an answer to this question.

Biogen Inc. (NASDAQ:BIIB) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 63 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that BIIB 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 BIIB to other stocks including Palantir Technologies Inc. (NYSE:PLTR), EOG Resources Inc (NYSE:EOG), and Roper Technologies Inc. (NYSE:ROP) to get a better sense of its popularity.

Today there are a multitude of metrics shareholders can use to assess publicly traded companies. A duo of the most innovative metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform the S&P 500 by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Joseph Edelman of Perceptive Advisors

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. With all of this in mind let’s view the latest hedge fund action surrounding Biogen Inc. (NASDAQ:BIIB).

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

At Q1’s end, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BIIB 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.

Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Biogen Inc. (NASDAQ:BIIB), worth close to $542.2 million, corresponding to 0.7% of its total 13F portfolio. On Renaissance Technologies’s heels is AQR Capital Management, led by Cliff Asness, holding a $283.8 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions comprise Joseph Edelman’s Perceptive Advisors, Warren Buffett’s Berkshire Hathaway and Alex Denner’s Sarissa Capital Management. In terms of the portfolio weights assigned to each position Sarissa Capital Management allocated the biggest weight to Biogen Inc. (NASDAQ:BIIB), around 17.24% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, dishing out 8.26 percent of its 13F equity portfolio to BIIB.

Since Biogen Inc. (NASDAQ:BIIB) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their positions entirely heading into Q2. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest position of the 750 funds watched by Insider Monkey, worth about $77.5 million in stock. Stephen DuBois’s fund, Camber Capital Management, also cut its stock, about $49 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Biogen Inc. (NASDAQ:BIIB). We will take a look at Palantir Technologies Inc. (NYSE:PLTR), EOG Resources Inc (NYSE:EOG), Roper Technologies Inc. (NYSE:ROP), DoorDash, Inc. (NYSE:DASH), American Electric Power Company, Inc. (NASDAQ:AEP), National Grid plc (NYSE:NGG), and Roku, Inc. (NASDAQ:ROKU). This group of stocks’ market valuations match BIIB’s market valuation.

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As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $1848 million. That figure was $2481 million in BIIB’s case. Roku, Inc. (NASDAQ:ROKU) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 9 bullish hedge fund positions. Biogen Inc. (NASDAQ:BIIB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BIIB is 78.3. 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. Hedge funds were also right about betting on BIIB as the stock returned 21.5% since the end of Q1 (through 8/6) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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