Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Novartis AG (ADR) (NYSE:NVS) from the perspective of those elite funds.
Novartis AG (ADR) (NYSE:NVS) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. NVS was in 26 hedge funds’ portfolios at the end of the third quarter of 2016. There were 22 hedge funds in our database with NVS positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The Coca-Cola Company (NYSE:KO), Oracle Corporation (NASDAQ:ORCL), and Fomento Economico Mexicano SAB (ADR) (NYSE:FMX) to gather more data points.
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What does the smart money think about Novartis AG (ADR) (NYSE:NVS)?
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, up by 18% from one quarter earlier and pushing ownership of the stock up by 1 fund in 2016. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in Novartis AG (ADR) (NYSE:NVS), worth close to $478.9 million. Sitting at the No. 2 spot is Jim Simons’ Renaissance Technologies, which holds a $198.6 million position. Remaining hedge funds and institutional investors with similar optimism comprise John Osterweis’ Osterweis Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Dmitry Balyasny’s Balyasny Asset Management, established the most valuable position in Novartis AG (ADR) (NYSE:NVS). Balyasny Asset Management had $36.3 million invested in the company at the end of the third quarter. Malcolm Fairbairn’s Ascend Capital also initiated a $19.1 million position during the quarter. The following funds were also among the new NVS investors: Principal Global Investors’ Columbus Circle Investors, Efrem Kamen’s Pura Vida Investments, and Glenn Russell Dubin’s Highbridge Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Novartis AG (ADR) (NYSE:NVS) but similarly valued. We will take a look at The Coca-Cola Company (NYSE:KO), Oracle Corporation (NASDAQ:ORCL), Fomento Economico Mexicano SAB (ADR) (NYSE:FMX), and Visa Inc (NYSE:V). This group of stocks’ market values are closest to NVS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KO | 53 | 19569276 | -2 |
| ORCL | 56 | 5840268 | 3 |
| FMX | 16 | 207760 | 1 |
| V | 115 | 10263707 | -3 |
As you can see these stocks had an average of 60 hedge funds with bullish positions and the average amount invested in these stocks was $8.10 billion. That figure was $915 million in NVS’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Fomento Economico Mexicano SAB (ADR) (NYSE:FMX) is the least popular one with only 16 bullish hedge fund positions. Novartis AG (ADR) (NYSE:NVS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Visa Inc (NYSE:V) might be a better candidate to consider taking a long position in.
Disclosure: None
