Johnson & Johnson (NYSE:JNJ) was in 67 hedge funds' portfolio at the end of December. JNJ has experienced a decrease in hedge fund interest in recent months. There were 79 hedge funds in our database with JNJ holdings at the end of the previous quarter. Johnson & Johnson was downgraded by JP Morgan earlier this morning, so it's worth delving into this data further.
Credit: Johnson & Johnson (NYSE:JNJ)
In the financial world, there are many indicators market participants can use to track the equity markets. A couple of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass their index-focused peers by a solid amount (see just how much).
Just as beneficial, optimistic insider trading activity is another way to parse down the financial markets. There are plenty of motivations for an executive to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the useful potential of this tactic if piggybackers understand where to look (learn more here).
With these "truths" under our belt, let's take a peek at the recent action regarding Johnson & Johnson (NYSE:JNJ).
In preparation for this year, a total of 67 of the hedge funds we track were bullish in this stock, a change of -15% from one quarter earlier. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.
According to our comprehensive database, Ken Fisher's Fisher Asset Management had the most valuable position in Johnson & Johnson (NYSE:JNJ), worth close to $728.7 million, accounting for 2% of its total 13F portfolio. The second largest stake is held by Yacktman Asset Management, managed by Donald Yacktman, which held a $588.5 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Prem Watsa's Fairfax Financial Holdings, Kerr Neilson's Platinum Asset Management and George Soros's Soros Fund Management.
Seeing as Johnson & Johnson (NYSE:JNJ) has faced declining sentiment from hedge fund managers, it's safe to say that there was a specific group of money managers that decided to sell off their full holdings in Q4. Intriguingly, Sean Cullinan's Point State Capital sold off the largest investment of all the hedgies we monitor, comprising about $158.5 million in call options. Robert Rodriguez and Steven Romick's fund, First Pacific Advisors LLC, also dumped its stock, about $134.4 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 12 funds in Q4.
Insider buying is at its handiest when the company in focus has seen transactions within the past six months. Over the latest 180-day time period, Johnson & Johnson (NYSE:JNJ) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to Johnson & Johnson (NYSE:JNJ). These stocks are GlaxoSmithKline plc (ADR) (NYSE:GSK), Merck & Co., Inc. (NYSE:MRK), Sanofi SA (ADR) (NYSE:SNY), Novartis AG (ADR) (NYSE:NVS), and Pfizer Inc. (NYSE:PFE). All of these stocks are in the drug manufacturers - major industry and their market caps are closest to JNJ's market cap.