Hedge Funds Have Never Been This Bullish On Bristol Myers Squibb Company (BMY)

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details.). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Bristol Myers Squibb Company (NYSE:BMY) in this article.

Bristol Myers Squibb Company (NYSE:BMY) investors should be aware of an increase in enthusiasm from smart money in recent months. BMY was in 122 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 61 hedge funds in our database with BMY positions at the end of the previous quarter. Our calculations also showed that BMY now ranks 10th among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a multitude of indicators stock market investors use to assess stocks. A couple of the most innovative indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform the market by a very impressive amount (see the details here).

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

We leave no stone unturned when looking for the next great investment idea. For example this gold mining company is acquiring gold mines in Americas at a fraction of the cost of drilling them, so we look into its viability. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned nearly 50% despite the large losses in the market since our recommendation. Now let’s take a gander at the latest hedge fund action regarding Bristol Myers Squibb Company (NYSE:BMY).

Hedge fund activity in Bristol Myers Squibb Company (NYSE:BMY)

Heading into the first quarter of 2020, a total of 122 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in BMY over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in Bristol Myers Squibb Company (NYSE:BMY) was held by Renaissance Technologies, which reported holding $3864.9 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $417.4 million position. Other investors bullish on the company included Orbis Investment Management, Baupost Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Birchview Capital allocated the biggest weight to Bristol Myers Squibb Company (NYSE:BMY), around 36.33% of its 13F portfolio. Copernicus Capital Management is also relatively very bullish on the stock, earmarking 11.18 percent of its 13F equity portfolio to BMY.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Orbis Investment Management, managed by William B. Gray, created the biggest position in Bristol Myers Squibb Company (NYSE:BMY). Orbis Investment Management had $351.9 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $150.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Samuel Isaly’s OrbiMed Advisors, and Matthew Halbower’s Pentwater Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Bristol Myers Squibb Company (NYSE:BMY). These stocks are The Unilever Group (NYSE:UL), McDonald’s Corporation (NYSE:MCD), PetroChina Company Limited (NYSE:PTR), and salesforce.com, inc. (NYSE:CRM). This group of stocks’ market valuations are closest to BMY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UL 17 247925 2
MCD 57 1633049 5
PTR 13 94057 0
CRM 112 9798571 3
Average 49.75 2943401 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.75 hedge funds with bullish positions and the average amount invested in these stocks was $2943 million. That figure was $7810 million in BMY’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Bristol Myers Squibb Company (NYSE:BMY) is more popular among hedge funds. 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 also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Unfortunately BMY wasn’t nearly as successful as these 20 stocks and hedge funds that were betting on BMY were disappointed as the stock returned -5.3% during the first two months of 2020 (through March 2nd) 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 most of these stocks already outperformed the market in Q1.

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