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Hedge Funds Are Selling Novo Nordisk A/S (ADR) (NYSE:NVO) – Forest Laboratories, Inc. (NYSE:FRX), Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY)

Is Novo Nordisk A/S (ADR) (NYSE:NVO) ready to raly soon? Money managers are turning less bullish. The number of long hedge fund positions retreated by 1 lately.

To most stock holders, hedge funds are assumed to be slow, outdated financial tools of the past. While there are over 8000 funds with their doors open at present, we at Insider Monkey look at the leaders of this group, about 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total asset base, and by tracking their top equity investments, we have figured out a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Novo Nordisk A/S (ADR) (NYSE:NVO)

Just as integral, optimistic insider trading sentiment is another way to break down the financial markets. Just as you’d expect, there are many motivations for an insider to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the valuable potential of this method if you understand where to look (learn more here).

Keeping this in mind, let’s take a peek at the latest action encompassing Novo Nordisk A/S (ADR) (NYSE:NVO).

How are hedge funds trading Novo Nordisk A/S (ADR) (NYSE:NVO)?

At the end of the fourth quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of -8% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Ken Fisher’s Fisher Asset Management had the biggest position in Novo Nordisk A/S (ADR) (NYSE:NVO), worth close to $435 million, comprising 1.2% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $381 million position; 0% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Tom Gayner’s Markel Gayner Asset Management and D. E. Shaw’s D E Shaw.

Since Novo Nordisk A/S (ADR) (NYSE:NVO) has faced a declination in interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedgies that slashed their positions entirely in Q4. Interestingly, Peter J. Eichler Jr.’s Aletheia Research and Management dropped the largest investment of all the hedgies we watch, totaling an estimated $14 million in stock.. Louis Navellier’s fund, Navellier & Associates, also dropped its stock, about $0 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds in Q4.

Insider trading activity in Novo Nordisk A/S (ADR) (NYSE:NVO)

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past half-year. Over the latest half-year time period, Novo Nordisk A/S (ADR) (NYSE:NVO) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Novo Nordisk A/S (ADR) (NYSE:NVO). These stocks are Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), Allergan, Inc. (NYSE:AGN), Forest Laboratories, Inc. (NYSE:FRX), Pharmacyclics, Inc. (NASDAQ:PCYC), and Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY). This group of stocks are in the drug manufacturers – other industry and their market caps match NVO’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) 46 0 0
Allergan, Inc. (NYSE:AGN) 30 0 11
Forest Laboratories, Inc. (NYSE:FRX) 29 0 6
Pharmacyclics, Inc. (NASDAQ:PCYC) 19 0 7
Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY) 10 0 0

With the results shown by our studies, retail investors must always monitor hedge fund and insider trading activity, and Novo Nordisk A/S (ADR) (NYSE:NVO) applies perfectly to this mantra.

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