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 Sanofi (NYSE:SNY).
Is Sanofi (NYSE:SNY) a healthy stock for your portfolio? The smart money was becoming hopeful. The number of bullish hedge fund positions increased by 1 lately. Sanofi (NYSE:SNY) was in 16 hedge funds’ portfolios at the end of June. The all time high for this statistic is 32. Our calculations also showed that SNY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 15 hedge funds in our database with SNY holdings at the end of March.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, 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. Keeping this in mind let’s take a gander at the fresh hedge fund action regarding Sanofi (NYSE:SNY).
Do Hedge Funds Think SNY Is A Good Stock To Buy Now?
At the end of June, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the first quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in SNY a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Sanofi (NYSE:SNY), which was worth $941.8 million at the end of the second quarter. On the second spot was Camber Capital Management which amassed $118.5 million worth of shares. Point72 Asset Management, Sphera Global Healthcare Fund, and Arrowstreet Capital 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 Camber Capital Management allocated the biggest weight to Sanofi (NYSE:SNY), around 3.99% of its 13F portfolio. Sphera Global Healthcare Fund is also relatively very bullish on the stock, earmarking 3 percent of its 13F equity portfolio to SNY.
Now, some big names were leading the bulls’ herd. Camber Capital Management, managed by Stephen DuBois, initiated the most valuable position in Sanofi (NYSE:SNY). Camber Capital Management had $118.5 million invested in the company at the end of the quarter. Bhagwan Jay Rao’s Integral Health Asset Management also made a $18.4 million investment in the stock during the quarter. The other funds with brand new SNY positions are Krishen Sud’s Sivik Global Healthcare and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now review hedge fund activity in other stocks similar to Sanofi (NYSE:SNY). We will take a look at International Business Machines Corp. (NYSE:IBM), Applied Materials, Inc. (NASDAQ:AMAT), Raytheon Technologies Corp (NYSE:RTX), Goldman Sachs Group, Inc. (NYSE:GS), Toronto-Dominion Bank (NYSE:TD), JD.Com Inc (NASDAQ:JD), and American Tower Corporation (NYSE:AMT). All of these stocks’ market caps are closest to SNY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IBM | 41 | 1373521 | 0 |
| AMAT | 73 | 4594094 | -5 |
| RTX | 53 | 2112283 | -5 |
| GS | 61 | 5183843 | -16 |
| TD | 17 | 303083 | -2 |
| JD | 76 | 10697800 | 1 |
| AMT | 55 | 4720340 | -3 |
| Average | 53.7 | 4140709 | -4.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 53.7 hedge funds with bullish positions and the average amount invested in these stocks was $4141 million. That figure was $1261 million in SNY’s case. JD.Com Inc (NASDAQ:JD) is the most popular stock in this table. On the other hand Toronto-Dominion Bank (NYSE:TD) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Sanofi (NYSE:SNY) is even less popular than TD. Our overall hedge fund sentiment score for SNY is 21. 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. Hedge funds dodged a bullet by taking a bearish stance towards SNY. Our calculations showed that the top 5 most popular hedge fund stocks 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 but managed to beat the market again by 3.1 percentage points. Unfortunately SNY wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); SNY investors were disappointed as the stock returned -2.6% since the end of the second quarter (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 most of these stocks already outperformed the market since 2019.
Follow Sanofi Aventis (NYSE:SNY)
Follow Sanofi Aventis (NYSE:SNY)
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Disclosure: None. This article was originally published at Insider Monkey.
