We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) was in 33 hedge funds’ portfolios at the end of December. ALNY has experienced an increase in activity from the world’s largest hedge funds of late. There were 30 hedge funds in our database with ALNY positions at the end of the previous quarter. Our calculations also showed that ALNY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 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 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Lee Ainslie of Maverick Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the key hedge fund action surrounding Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).
What have hedge funds been doing with Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)?
At the end of the fourth quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in ALNY a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) was held by Maverick Capital, which reported holding $260.4 million worth of stock at the end of September. It was followed by Farallon Capital with a $167 million position. Other investors bullish on the company included Slate Path Capital, 12 West Capital Management, and Casdin Capital. In terms of the portfolio weights assigned to each position Casdin Capital allocated the biggest weight to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), around 5.45% of its 13F portfolio. 12 West Capital Management is also relatively very bullish on the stock, dishing out 5.34 percent of its 13F equity portfolio to ALNY.
As industrywide interest jumped, key money managers have jumped into Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) headfirst. Duquesne Capital, managed by Stanley Druckenmiller, assembled the most valuable position in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). Duquesne Capital had $13.4 million invested in the company at the end of the quarter. Greg Martinez’s Parkman Healthcare Partners also made a $4 million investment in the stock during the quarter. The other funds with brand new ALNY positions are Michael Gelband’s ExodusPoint Capital, Donald Sussman’s Paloma Partners, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). We will take a look at Equity Lifestyle Properties, Inc. (NYSE:ELS), Lyft, Inc. (NASDAQ:LYFT), Icahn Enterprises LP (NASDAQ:IEP), and Duke Realty Corporation (NYSE:DRE). All of these stocks’ market caps are closest to ALNY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ELS | 23 | 480119 | 2 |
| LYFT | 45 | 984290 | 10 |
| IEP | 4 | 12205892 | -1 |
| DRE | 24 | 183153 | 5 |
| Average | 24 | 3463364 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $3463 million. That figure was $938 million in ALNY’s case. Lyft, Inc. (NASDAQ:LYFT) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 bullish hedge fund positions. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. Hedge funds were also right about betting on ALNY as the stock returned -14.6% during the first quarter (through March 16th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
