Sanofi SA (ADR) (NYSE:SNY) is preparing to oust all the board members of Medivation, Reuters reported on Wednesday, citing people familiar with the matter. The decision comes after Medivation rejected Sanofi’s $9.3 billion acquisition offer last month. Sanofi will use the ‘written consent’ rule which gives Medivation shareholders the ability to replace directors at any time. Medivation ended its negotiations with the Paris-based healthcare company, and demanded a $52.50 per share cash offer, the source added. Sanofi, on the other hand, says that it is willing to raise its offer only if Medivation resumes negotiations. Amid news, Sanofi’s stock has gained 1.90% so far today.
Sanofi SA (ADR) (NYSE:SNY) was in 30 hedge funds’ portfolios at the end of the first quarter of 2016. SNY has experienced a decrease in enthusiasm from smart money in recent months. There were 31 hedge funds in our database with SNY 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 Mastercard Inc (NYSE:MA), NIKE, Inc. (NYSE:NKE), and BP plc (ADR) (NYSE:BP) to gather more data points.
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In the eyes of most market participants, hedge funds are perceived as underperforming, outdated investment tools of the past. While there are more than 8000 funds with their doors open today, Our researchers choose to focus on the masters of this group, approximately 700 funds. These investment experts shepherd the majority of the hedge fund industry’s total asset base, and by monitoring their matchless investments, Insider Monkey has found a number of investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points a year for a decade in their back tests.
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 3% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Sanofi SA (ADR) (NYSE:SNY). Fisher Asset Management has a $593 million position in the stock, comprising 1.1% of its 13F portfolio. The second most bullish fund manager is Berkshire Hathaway, managed by Warren Buffett, which holds a $156.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Francis Chou’s Chou Associates Management, Michael Castor’s Sio Capital and Paul Orlin and Alex Porter’s Amici Capital.
On the next page, we are going to take a look at the funds that unloaded their entire stakes in Sanofi during the first three months of 2016.
Since Sanofi SA (ADR) (NYSE:SNY) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedgies who were dropping their positions entirely by the end of the first quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest position of all the hedgies tracked by Insider Monkey, comprising an estimated $47 million in stock. Michael Messner’s fund, Seminole Capital, also dumped its stock, about $26.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sanofi SA (ADR) (NYSE:SNY) but similarly valued. These stocks are Mastercard Inc (NYSE:MA), NIKE, Inc. (NYSE:NKE), BP plc (ADR) (NYSE:BP), and 3M Co (NYSE:MMM). This group of stocks’ market valuations match SNY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MA | 80 | 6217221 | 0 |
| NKE | 64 | 3648837 | 1 |
| BP | 34 | 685461 | 2 |
| MMM | 39 | 1336637 | 8 |
As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $2.97 billion. That figure was $814 million in SNY’s case. Mastercard Inc (NYSE:MA) is the most popular stock in this table. On the other hand BP plc (ADR) (NYSE:BP) is the least popular one with only 34 bullish hedge fund positions. Compared to these stocks Sanofi SA (ADR) (NYSE:SNY) is even less popular than BP. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
