Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Biogen Inc. (NASDAQ:BIIB) was in 43 hedge funds’ portfolios at the end of June. BIIB shareholders have witnessed a decrease in hedge fund interest in recent months. There were 49 hedge funds in our database with BIIB holdings at the end of the previous quarter. Our calculations also showed that BIIB isn’t among the 30 most popular stocks among hedge funds (see the video at the end of this article).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the new hedge fund action regarding Biogen Inc. (NASDAQ:BIIB).
What have hedge funds been doing with Biogen Inc. (NASDAQ:BIIB)?
At the end of the second quarter, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from the previous quarter. On the other hand, there were a total of 53 hedge funds with a bullish position in BIIB a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Biogen Inc. (NASDAQ:BIIB) was held by AQR Capital Management, which reported holding $887.2 million worth of stock at the end of March. It was followed by D E Shaw with a $601.7 million position. Other investors bullish on the company included Arrowstreet Capital, Renaissance Technologies, and Sarissa Capital Management.
Because Biogen Inc. (NASDAQ:BIIB) has faced a decline in interest from the smart money, it’s easy to see that there is a sect of hedge funds that decided to sell off their entire stakes by the end of the second quarter. At the top of the heap, Robert Pohly’s Samlyn Capital cut the largest investment of all the hedgies monitored by Insider Monkey, comprising close to $139 million in stock, and Stephen DuBois’s Camber Capital Management was right behind this move, as the fund cut about $94.6 million worth. These moves are interesting, as aggregate hedge fund interest fell by 6 funds by the end of the second quarter.
Let’s now review hedge fund activity in other stocks similar to Biogen Inc. (NASDAQ:BIIB). These stocks are TC Energy Corporation (NYSE:TRP), Vodafone Group Plc (NASDAQ:VOD), ING Groep N.V. (NYSE:ING), and Target Corporation (NYSE:TGT). This group of stocks’ market values are closest to BIIB’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $584 million. That figure was $3522 million in BIIB’s case. Target Corporation (NYSE:TGT) is the most popular stock in this table. On the other hand ING Groep N.V. (NYSE:ING) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Biogen Inc. (NASDAQ:BIIB) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BIIB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BIIB were disappointed as the stock returned -0.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
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.