In this article we will take a look at whether hedge funds think BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) was in 54 hedge funds’ portfolios at the end of March. BMRN investors should be aware of an increase in hedge fund sentiment in recent months. There were 49 hedge funds in our database with BMRN positions at the end of the previous quarter. Our calculations also showed that BMRN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 S&P 500 ETFs by 44 percentage points since March 2017 (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.
William Leland Edwards of Palo Alto Investors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. With all of this in mind we’re going to review the key hedge fund action encompassing BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
Hedge fund activity in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)
Heading into the second quarter of 2020, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BMRN over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Baker Bros. Advisors held the most valuable stake in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), which was worth $641.3 million at the end of the third quarter. On the second spot was Avoro Capital Advisors (venBio Select Advisor) which amassed $163.1 million worth of shares. Palo Alto Investors, Viking Global, and Zevenbergen Capital Investments 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 Palo Alto Investors allocated the biggest weight to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), around 10.93% of its 13F portfolio. Copernicus Capital Management is also relatively very bullish on the stock, earmarking 10.55 percent of its 13F equity portfolio to BMRN.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the most valuable position in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). Adage Capital Management had $28.3 million invested in the company at the end of the quarter. Henrik Rhenman’s Rhenman & Partners Asset Management also initiated a $15.6 million position during the quarter. The following funds were also among the new BMRN investors: David Harding’s Winton Capital Management, Vishal Saluja and Pham Quang’s Endurant Capital Management, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks similar to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). We will take a look at Marvell Technology Group Ltd. (NASDAQ:MRVL), Okta, Inc. (NASDAQ:OKTA), Carrier Global Corporation (NYSE:CARR), and Slack Technologies Inc (NYSE:WORK). This group of stocks’ market values resemble BMRN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRVL | 29 | 498283 | 0 |
| OKTA | 48 | 1086612 | 9 |
| CARR | 3 | 9338 | 3 |
| WORK | 31 | 465454 | 2 |
| Average | 27.75 | 514922 | 3.5 |
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 $515 million. That figure was $1567 million in BMRN’s case. Okta, Inc. (NASDAQ:OKTA) is the most popular stock in this table. On the other hand Carrier Global Corporation (NYSE:CARR) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on BMRN, though not to the same extent, as the stock returned 15.4% in Q2 (through May 22nd) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
