How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Bristol Myers Squibb Company (NYSE:BMY).
Is Bristol Myers Squibb Company (NYSE:BMY) a first-rate stock to buy now? Hedge funds were in a pessimistic mood. The number of bullish hedge fund bets went down by 50 recently. Bristol Myers Squibb Company (NYSE:BMY) was in 81 hedge funds’ portfolios at the end of March. The all time high for this statistic is 136. Our calculations also showed that BMY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a lot of gauges investors use to size up stocks. A duo of the most underrated gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outpace the S&P 500 by a significant 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 .
Paul Marshall of Marshall Wace
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 we’re going to go over the new hedge fund action encompassing Bristol Myers Squibb Company (NYSE:BMY).
Do Hedge Funds Think BMY Is A Good Stock To Buy Now?
At the end of March, a total of 81 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from the previous quarter. On the other hand, there were a total of 126 hedge funds with a bullish position in BMY a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Berkshire Hathaway was the largest shareholder of Bristol Myers Squibb Company (NYSE:BMY), with a stake worth $1959.1 million reported as of the end of March. Trailing Berkshire Hathaway was Renaissance Technologies, which amassed a stake valued at $440.2 million. Viking Global, OrbiMed Advisors, and Marshall Wace LLP 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 Birchview Capital allocated the biggest weight to Bristol Myers Squibb Company (NYSE:BMY), around 29.76% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, designating 8.27 percent of its 13F equity portfolio to BMY.
Because Bristol Myers Squibb Company (NYSE:BMY) has witnessed falling interest from the smart money, logic holds that there is a sect of money managers that decided to sell off their entire stakes in the first quarter. Intriguingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP dropped the biggest stake of all the hedgies tracked by Insider Monkey, totaling about $80.5 million in stock, and Doug Silverman and Alexander Klabin’s Senator Investment Group was right behind this move, as the fund sold off about $55.8 million worth. These moves are important to note, as aggregate hedge fund interest fell by 50 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Bristol Myers Squibb Company (NYSE:BMY). These stocks are Philip Morris International Inc. (NYSE:PM), Shopify Inc (NYSE:SHOP), Lowe’s Companies, Inc. (NYSE:LOW), Charter Communications, Inc. (NASDAQ:CHTR), JD.Com Inc (NASDAQ:JD), Royal Bank of Canada (NYSE:RY), and Sony Corporation (NYSE:SNE). This group of stocks’ market values match BMY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PM | 48 | 5494085 | -4 |
| SHOP | 91 | 9984457 | 1 |
| LOW | 61 | 5171876 | -10 |
| CHTR | 74 | 16399220 | -16 |
| JD | 75 | 11309916 | -14 |
| RY | 18 | 716039 | 0 |
| SNE | 27 | 541868 | -1 |
| Average | 56.3 | 7088209 | -6.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 56.3 hedge funds with bullish positions and the average amount invested in these stocks was $7088 million. That figure was $5037 million in BMY’s case. Shopify Inc (NYSE:SHOP) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 18 bullish hedge fund positions. Bristol Myers Squibb Company (NYSE:BMY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BMY is 16. 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 25.8% in 2021 through August 6th and beat the market again by 6.7 percentage points. Unfortunately BMY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BMY were disappointed as the stock returned 8.7% since the end of March (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 many of these stocks already outperformed the market since 2019.
Follow Bristol Myers Squibb Co (NYSE:BMY)
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Disclosure: None. This article was originally published at Insider Monkey.
