Hedge Funds Are Betting On BeiGene, Ltd. (BGNE)

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on BeiGene, Ltd. (NASDAQ:BGNE).

BeiGene, Ltd. (NASDAQ:BGNE) has seen an increase in hedge fund interest of late. Our calculations also showed that BGNE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

To most shareholders, hedge funds are assumed to be unimportant, old investment vehicles of the past. While there are more than 8000 funds trading at present, Our experts choose to focus on the aristocrats of this club, approximately 850 funds. These investment experts have their hands on most of all hedge funds’ total capital, and by monitoring their inimitable stock picks, Insider Monkey has brought to light many investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Kris Jenner - Rock Springs Capital

Kris Jenner of Rock Springs Capital Management

We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the latest hedge fund action surrounding BeiGene, Ltd. (NASDAQ:BGNE).

How are hedge funds trading BeiGene, Ltd. (NASDAQ:BGNE)?

Heading into the first quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in BGNE a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

More specifically, Baker Bros. Advisors was the largest shareholder of BeiGene, Ltd. (NASDAQ:BGNE), with a stake worth $1952.2 million reported as of the end of September. Trailing Baker Bros. Advisors was Hillhouse Capital Management, which amassed a stake valued at $907.1 million. Rock Springs Capital Management, Indus Capital, and Clough Capital Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ariose Capital allocated the biggest weight to BeiGene, Ltd. (NASDAQ:BGNE), around 12.36% of its 13F portfolio. Hillhouse Capital Management is also relatively very bullish on the stock, earmarking 11.3 percent of its 13F equity portfolio to BGNE.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the most valuable position in BeiGene, Ltd. (NASDAQ:BGNE). Millennium Management had $11.8 million invested in the company at the end of the quarter. Yi Xin’s Ariose Capital also made a $8.5 million investment in the stock during the quarter. The other funds with brand new BGNE positions are Renaissance Technologies, Ken Griffin’s Citadel Investment Group, and Benjamin A. Smith’s Laurion Capital Management.

Let’s go over hedge fund activity in other stocks similar to BeiGene, Ltd. (NASDAQ:BGNE). We will take a look at Pinnacle West Capital Corporation (NYSE:PNW), Shaw Communications Inc (NYSE:SJR), ON Semiconductor Corporation (NASDAQ:ON), and NRG Energy Inc (NYSE:NRG). All of these stocks’ market caps are closest to BGNE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PNW 25 817992 -2
SJR 12 136938 -1
ON 32 562929 7
NRG 42 1399123 -6
Average 27.75 729246 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $729 million. That figure was $2963 million in BGNE’s case. NRG Energy Inc (NYSE:NRG) is the most popular stock in this table. On the other hand Shaw Communications Inc (NYSE:SJR) is the least popular one with only 12 bullish hedge fund positions. BeiGene, Ltd. (NASDAQ:BGNE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. A small number of hedge funds were also right about betting on BGNE as the stock returned -15.5% during the same time period and outperformed the market by an even larger margin.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.