5 Healthcare Stocks Hedge Funds Are Dumping Like Crazy

Shire PLC (ADR) (NASDAQ:SHPG)

– Number of Hedge Fund Shareholders (as of September 30): 50
– Total Value of Hedge Fund Holdings (as of September 30): $3.58 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 56.70%

A net total of 14 funds headed for Shire PLC’s exits in the third quarter, leaving 50 funds as believers in the stock. Although shares bounced along with the broader healthcare sector on the news of Donald Trump’s victory over Hillary Clinton, Shire has retraced since, as investors remain cautious on the drug sector. Given Trump’s strong dollar policy, Shire’s overseas earnings might not be as great as expected in dollar terms even if its U.S. sales remain robust. The long-term legislative risk for pharma reimbursement remains as well.

Pfizer Inc. (NYSE:PFE)

– Number of Hedge Fund Shareholders (as of September 30): 83
– Total Value of Hedge Fund Holdings (as of September 30): $5.5 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 2.70%

83 funds in our database owned shares of Pfizer Inc. (NYSE:PFE) at the end of September, down by 11 funds from the end of June. Some hedge funds likely left Pfizer due to concerns that Clinton would win the Presidency and that government regulation would subsequently increase. Now that Trump has won, however, Pfizer’s 3.79% dividend yield looks a lot more appetizing. With Trump promising less regulation and lower taxes, Pfizer’s cash flow for the next four years looks more attractive.

Allergan plc Ordinary Shares (NYSE:AGN)

– Number of Hedge Fund Shareholders (as of September 30): 115
– Total Value of Hedge Fund Holdings (as of September 30): $10.59 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 15.20%

While a net total of 16 funds may have sold out of the stock in the third quarter, Allergan plc Ordinary Shares (NYSE:AGN) remains one of the smart money’s top picks. According to our data, 115 funds that we track owned shares of the drug maker, making it the sixth-most widely-held company among the institutions that we follow. Although shares haven’t done well this year, Allergan trades for an attractive 12-times forward P/E. The company is also shareholder-friendly, having publicly stated that it is planning to repurchase up to $10 billion of its stock through an accelerated buyback program. It remains to be seen though whether Allergan’s valuation and buyback can offset its softer full-year outlook.

Disclosure: None