Were These Hedge Funds Wrong About Alnylam Pharmaceuticals, Inc. (ALNY)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).

Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistics is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ALNY investors should be aware of an increase in support from the world’s most elite money managers of late. There were 34 hedge funds in our database with ALNY positions at the end of the first quarter. Our calculations also showed that ALNY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are many methods shareholders put to use to value publicly traded companies. A couple of the most useful methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outperform their index-focused peers by a very impressive margin (see the details here).

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 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we’re going to take a gander at the latest hedge fund action encompassing Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY).

How have hedgies been trading Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)?

At Q2’s end, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ALNY over the last 20 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

More specifically, Maverick Capital was the largest shareholder of Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), with a stake worth $164.9 million reported as of the end of June. Trailing Maverick Capital was Farallon Capital, which amassed a stake valued at $155.5 million. 12 West Capital Management, Slate Path Capital, and Casdin 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 12 West Capital Management allocated the biggest weight to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), around 5.63% of its 13F portfolio. Slate Path Capital is also relatively very bullish on the stock, designating 5.1 percent of its 13F equity portfolio to ALNY.

Now, specific money managers have jumped into Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) headfirst. Eminence Capital, managed by Ricky Sandler, established the most outsized position in Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). Eminence Capital had $26.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $8.6 million position during the quarter. The following funds were also among the new ALNY investors: John Overdeck and David Siegel’s Two Sigma Advisors, Benjamin A. Smith’s Laurion Capital Management, and Greg Eisner’s Engineers Gate Manager.

Let’s go over hedge fund activity in other stocks similar to Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). We will take a look at Cheniere Energy Partners LP (NYSE:CQP), Teleflex Incorporated (NYSE:TFX), Freeport-McMoRan Inc. (NYSE:FCX), W.W. Grainger, Inc. (NYSE:GWW), Occidental Petroleum Corporation (NYSE:OXY), Weyerhaeuser Co. (NYSE:WY), and CMS Energy Corporation (NYSE:CMS). This group of stocks’ market valuations are closest to ALNY’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $710 million. That figure was $983 million in ALNY’s case. Freeport-McMoRan Inc. (NYSE:FCX) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 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 overall hedge fund sentiment score for ALNY is 74. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately ALNY wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ALNY were disappointed as the stock returned -17% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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