Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Jazz Pharmaceuticals Plc (NASDAQ:JAZZ).
Is Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) going to take off soon? The smart money was turning less bullish. The number of bullish hedge fund bets went down by 3 lately. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) was in 34 hedge funds’ portfolios at the end of June. The all time high for this statistic is 49. Our calculations also showed that JAZZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 37 hedge funds in our database with JAZZ positions at the end of the first quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bernard Horn of Polaris Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the fresh hedge fund action encompassing Jazz Pharmaceuticals Plc (NASDAQ:JAZZ).
Do Hedge Funds Think JAZZ Is A Good Stock To Buy Now?
At Q2’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the first quarter of 2020. On the other hand, there were a total of 34 hedge funds with a bullish position in JAZZ a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) was held by Renaissance Technologies, which reported holding $411.6 million worth of stock at the end of June. It was followed by Polaris Capital Management with a $229.6 million position. Other investors bullish on the company included Citadel Investment Group, AQR Capital Management, and Redmile Group. In terms of the portfolio weights assigned to each position Tri Locum Partners allocated the biggest weight to Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), around 7.91% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, designating 7.41 percent of its 13F equity portfolio to JAZZ.
Judging by the fact that Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few hedgies who were dropping their positions entirely by the end of the second quarter. Interestingly, Carl Tiedemann and Michael Tiedemann’s TIG Advisors sold off the biggest investment of all the hedgies watched by Insider Monkey, totaling about $4.5 million in stock. Peter Muller’s fund, PDT Partners, also said goodbye to its stock, about $4.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds by the end of the second quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) but similarly valued. These stocks are Cleveland-Cliffs Inc (NYSE:CLF), Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI), Marathon Oil Corporation (NYSE:MRO), PRA Health Sciences Inc (NASDAQ:PRAH), The Scotts Miracle-Gro Company (NYSE:SMG), Deckers Outdoor Corp (NASDAQ:DECK), and ChargePoint Holdings, Inc. (NYSE:CHPT). This group of stocks’ market caps are similar to JAZZ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLF | 44 | 1111037 | 8 |
| MRVI | 20 | 572985 | -6 |
| MRO | 34 | 655729 | 5 |
| PRAH | 43 | 2995527 | 8 |
| SMG | 32 | 369779 | -2 |
| DECK | 44 | 1473505 | 4 |
| CHPT | 17 | 149306 | -7 |
| Average | 33.4 | 1046838 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $1047 million. That figure was $1494 million in JAZZ’s case. Cleveland-Cliffs Inc (NYSE:CLF) is the most popular stock in this table. On the other hand ChargePoint Holdings, Inc. (NYSE:CHPT) is the least popular one with only 17 bullish hedge fund positions. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JAZZ is 54.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately JAZZ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on JAZZ were disappointed as the stock returned -23.1% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Jazz Pharmaceuticals Plc (NASDAQ:JAZZ)
Follow Jazz Pharmaceuticals Plc (NASDAQ:JAZZ)
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Disclosure: None. This article was originally published at Insider Monkey.
