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Hedge Funds Never Been Less Bullish On Sanofi (SNY)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Sanofi (NASDAQ:SNY) based on those filings.

Sanofi (NASDAQ:SNY) has experienced a decrease in hedge fund sentiment recently. SNY was in 15 hedge funds’ portfolios at the end of March. There were 31 hedge funds in our database with SNY holdings at the end of the previous quarter. Our calculations also showed that SNY 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.

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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Steven Cohen of Point72 Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. With all of this in mind we’re going to take a peek at the new hedge fund action encompassing Sanofi (NASDAQ:SNY).

How are hedge funds trading Sanofi (NASDAQ:SNY)?

Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -52% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in SNY a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Sanofi (NASDAQ:SNY). Fisher Asset Management has a $772.2 million position in the stock, comprising 1% of its 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $52.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund, Dmitry Balyasny’s Balyasny Asset Management and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Endurant Capital Management allocated the biggest weight to Sanofi (NASDAQ:SNY), around 8.12% of its 13F portfolio. Sphera Global Healthcare Fund is also relatively very bullish on the stock, designating 5.3 percent of its 13F equity portfolio to SNY.

Since Sanofi (NASDAQ:SNY) has witnessed bearish sentiment from hedge fund managers, logic holds that there was a specific group of fund managers that slashed their positions entirely last quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, comprising close to $19.6 million in stock, and Paul Singer’s Elliott Management was right behind this move, as the fund said goodbye to about $17.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 16 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sanofi (NASDAQ:SNY) but similarly valued. We will take a look at Accenture Plc (NYSE:ACN), Charter Communications, Inc. (NASDAQ:CHTR), International Business Machines Corp. (NYSE:IBM), and Union Pacific Corporation (NYSE:UNP). This group of stocks’ market valuations resemble SNY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACN 49 1003250 8
CHTR 104 9914920 39
IBM 41 902956 -9
UNP 63 3442520 -2
Average 64.25 3815912 9

View table here if you experience formatting issues.

As you can see these stocks had an average of 64.25 hedge funds with bullish positions and the average amount invested in these stocks was $3816 million. That figure was $971 million in SNY’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand International Business Machines Corp. (NYSE:IBM) is the least popular one with only 41 bullish hedge fund positions. Compared to these stocks Sanofi (NASDAQ:SNY) is even less popular than IBM. 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 13.3% in 2020 through June 25th but managed to beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on SNY, though not to the same extent, as the stock returned 23% during the second quarter (through June 25th) and outperformed the market as well.

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