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Should You Buy Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)?

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) was in 24 hedge funds’ portfolio at the end of the fourth quarter of 2012. ALXN has experienced an increase in support from the world’s most elite money managers in recent months. There were 22 hedge funds in our database with ALXN positions at the end of the previous quarter.

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)

If you’d ask most market participants, hedge funds are seen as underperforming, outdated financial tools of yesteryear. While there are more than 8000 funds in operation today, we choose to focus on the top tier of this club, about 450 funds. It is estimated that this group oversees most of all hedge funds’ total asset base, and by keeping an eye on their best picks, we have brought to light a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Just as beneficial, positive insider trading activity is a second way to parse down the investments you’re interested in. There are many incentives for an insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this strategy if you understand where to look (learn more here).

Keeping this in mind, it’s important to take a glance at the recent action surrounding Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN).

Hedge fund activity in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)

In preparation for this year, a total of 24 of the hedge funds we track were bullish in this stock, a change of 9% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Andreas Halvorsen’s Viking Global had the largest position in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), worth close to $376 million, comprising 2.6% of its total 13F portfolio. Sitting at the No. 2 spot is Columbus Circle Investors, managed by Donald Chiboucis, which held a $108 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Jérôme Pfund and Michael Sjöström’s Sectoral Asset Management, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

Consequently, specific money managers were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, created the biggest position in Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN). Viking Global had 376 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $9 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Broach’s Manatuck Hill Partners, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and Israel Englander’s Millennium Management.

What have insiders been doing with Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)?

Insider buying is most useful when the company in focus has experienced transactions within the past six months. Over the last 180-day time period, Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has experienced zero unique insiders buying, and 8 insider sales (see the details of insider trades here).

With the returns shown by the aforementioned studies, retail investors must always watch hedge fund and insider trading activity, and Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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