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Hedge Funds Keep Selling Takeda Pharmaceutical Company Limited (TAK)?

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 Takeda Pharmaceutical Company Limited (NYSE:TAK).

Takeda Pharmaceutical Company Limited (NYSE:TAK) was in 22 hedge funds’ portfolios at the end of March. TAK has seen a decrease in activity from the world’s largest hedge funds lately. There were 28 hedge funds in our database with TAK positions at the end of the previous quarter. Our calculations also showed that TAK 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

PAULSON & CO

John Paulson of Paulson & Co

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the latest hedge fund action surrounding Takeda Pharmaceutical Company Limited (NYSE:TAK).

What have hedge funds been doing with Takeda Pharmaceutical Company Limited (NYSE:TAK)?

At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TAK over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is TAK A Good Stock To Buy?

Among these funds, Glenview Capital held the most valuable stake in Takeda Pharmaceutical Company Limited (NYSE:TAK), which was worth $302.9 million at the end of the third quarter. On the second spot was Paulson & Co which amassed $201.1 million worth of shares. Renaissance Technologies, GMT Capital, and LMR 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 Glenview Capital allocated the biggest weight to Takeda Pharmaceutical Company Limited (NYSE:TAK), around 8.24% of its 13F portfolio. Paulson & Co is also relatively very bullish on the stock, setting aside 7.67 percent of its 13F equity portfolio to TAK.

Since Takeda Pharmaceutical Company Limited (NYSE:TAK) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds that slashed their full holdings by the end of the first quarter. It’s worth mentioning that Michel Massoud’s Melqart Asset Management cut the biggest position of the “upper crust” of funds followed by Insider Monkey, valued at close to $30.7 million in stock. Carl Tiedemann and Michael Tiedemann’s fund, TIG Advisors, also dumped its stock, about $21.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 6 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Takeda Pharmaceutical Company Limited (NYSE:TAK) but similarly valued. We will take a look at Micron Technology, Inc. (NASDAQ:MU), Target Corporation (NYSE:TGT), Brookfield Asset Management Inc. (NYSE:BAM), and CNOOC Limited (NYSE:CEO). This group of stocks’ market valuations resemble TAK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MU 94 3990785 5
TGT 54 2208909 1
BAM 37 886441 3
CEO 11 178140 -3
Average 49 1816069 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 49 hedge funds with bullish positions and the average amount invested in these stocks was $1816 million. That figure was $735 million in TAK’s case. Micron Technology, Inc. (NASDAQ:MU) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 11 bullish hedge fund positions. Takeda Pharmaceutical Company Limited (NYSE:TAK) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on TAK, though not to the same extent, as the stock returned 24.7% during the second quarter and outperformed the market.

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