We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Regeneron Pharmaceuticals Inc (NASDAQ:REGN) and determine whether hedge funds skillfully traded this stock.
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) has seen a decrease in support from the world’s most elite money managers of late. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was in 44 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 49. There were 48 hedge funds in our database with REGN holdings at the end of June. Our calculations also showed that REGN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s check out the latest hedge fund action encompassing Regeneron Pharmaceuticals Inc (NASDAQ:REGN).
Do Hedge Funds Think REGN Is A Good Stock To Buy Now?
At the end of September, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in REGN over the last 25 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was held by ARK Investment Management, which reported holding $259.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $182.2 million position. Other investors bullish on the company included AQR Capital Management, D E Shaw, and Polar Capital. In terms of the portfolio weights assigned to each position Bronte Capital allocated the biggest weight to Regeneron Pharmaceuticals Inc (NASDAQ:REGN), around 5.5% of its 13F portfolio. Tri Locum Partners is also relatively very bullish on the stock, earmarking 3.35 percent of its 13F equity portfolio to REGN.
Because Regeneron Pharmaceuticals Inc (NASDAQ:REGN) has faced falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds who were dropping their full holdings heading into Q4. Intriguingly, Arthur B Cohen and Joseph Healey’s Healthcor Management LP dumped the largest stake of the 750 funds monitored by Insider Monkey, totaling an estimated $106.3 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dumped its stock, about $105.4 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Regeneron Pharmaceuticals Inc (NASDAQ:REGN). We will take a look at Intercontinental Exchange Inc (NYSE:ICE), Bank of Montreal (NYSE:BMO), Aon plc (NYSE:AON), Colgate-Palmolive Company (NYSE:CL), Illumina, Inc. (NASDAQ:ILMN), Waste Management, Inc. (NYSE:WM), and Autodesk, Inc. (NASDAQ:ADSK). All of these stocks’ market caps resemble REGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ICE | 48 | 2832226 | 1 |
| BMO | 12 | 142342 | 0 |
| AON | 47 | 6005008 | -21 |
| CL | 54 | 2577652 | -4 |
| ILMN | 55 | 2801228 | 4 |
| WM | 36 | 3629155 | -3 |
| ADSK | 54 | 2356939 | -10 |
| Average | 43.7 | 2906364 | -4.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.7 hedge funds with bullish positions and the average amount invested in these stocks was $2906 million. That figure was $1318 million in REGN’s case. Illumina, Inc. (NASDAQ:ILMN) is the most popular stock in this table. On the other hand Bank of Montreal (NYSE:BMO) is the least popular one with only 12 bullish hedge fund positions. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for REGN is 65.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on REGN as the stock returned 0.6% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)
Follow Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)
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Disclosure: None. This article was originally published at Insider Monkey.
