Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) a buy, sell, or hold? The hedge fund sentiment registered a slight decline last quarter, as the number of funds from our database bullish on the company inched down by one. To get a better sense of the company’s popularity, we will also compare TEVA to other stocks including EOG Resources Inc (NYSE:EOG), Canadian National Railway (USA) (NYSE:CNI), and BHP Billiton Limited (ADR) (NYSE:BHP) at the end of this article.
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.
Keeping this in mind, we’re going to review the new action encompassing Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA).
How are hedge funds trading Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)?
At the end of the third quarter, 54 funds followed by our team were bullish on this stock, a decline of 2% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the number one position in Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). Viking Global has a $905.7 million position in the stock, comprising 3.9% of its 13F portfolio. Coming in second is John Paulson’s Paulson & Co, with a $739.7 million position; the fund has 8% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Zach Schreiber’s Point State Capital, Jonathon Jacobson’s Highfields Capital Management and David E. Shaw’s D E Shaw.
Because Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds that decided to sell off their full holdings in the third quarter. Daniel S. Och’s OZ Management sold off the largest position of the 700 funds followed by Insider Monkey, valued at about $370.8 million in stock, and John Griffin’s Blue Ridge Capital was right behind this move, as the fund dumped about $71.1 million worth of shares.
Let’s go over hedge fund activity in other stocks similar to Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). These stocks are EOG Resources Inc (NYSE:EOG), Canadian National Railway (USA) (NYSE:CNI), BHP Billiton Limited (ADR) (NYSE:BHP), and Honda Motor Co Ltd (ADR) (NYSE:HMC). This group of stocks’ market caps are closest to TEVA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $782 million. That figure was $4.26 billion in Teva Pharmaceutical’s case. EOG Resources Inc (NYSE:EOG) is the most popular stock in this table with 51 funds holding shares. On the other hand Honda Motor Co Ltd (ADR) (NYSE:HMC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.