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Hedge Funds Poured Into the iShares NASDAQ Biotechnology Index (ETF) (IBB) in Q3

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) in this article.

The iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) was in 23 hedge funds’ portfolios at the end of the third quarter of 2016. IBB investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. There were 18 hedge funds in our database with IBB positions at the end of the previous quarter. At the end of this article we will also compare IBB to other stocks including American Financial Group (NYSE:AFG), Flextronics International Ltd. (NASDAQ:FLEX), and Rollins, Inc. (NYSE:ROL) to get a better sense of its popularity.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB)?

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a 28% rise from one quarter earlier, pushing ownership of the ETF among hedge funds to a yearly high. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

HedgeFundSentimentChart

When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB). Citadel Investment Group has an $89.4 million call position in the stock. Sitting at the No. 2 spot is QVT Financial, managed by Daniel Gold, which holds a $27.1 million position; 1% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism consist of Alan Howard’s Brevan Howard and Stanley Druckenmiller’s Duquesne Capital.

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