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 September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded AstraZeneca plc (NYSE:AZN) based on those filings.
Is AZN a good stock to buy? AstraZeneca plc (NYSE:AZN) was in 33 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 38. AZN investors should be aware of a decrease in hedge fund interest in recent months. There were 38 hedge funds in our database with AZN holdings at the end of June. Our calculations also showed that AZN isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to view the recent hedge fund action regarding AstraZeneca plc (NYSE:AZN).
Do Hedge Funds Think AZN Is A Good Stock To Buy Now?
At the end of September, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in AZN over the last 21 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of AstraZeneca plc (NYSE:AZN), with a stake worth $950.4 million reported as of the end of September. Trailing Fisher Asset Management was GQG Partners, which amassed a stake valued at $589.1 million. Arrowstreet Capital, Two Sigma Advisors, and Citadel Investment Group 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 Sphera Global Healthcare Fund allocated the biggest weight to AstraZeneca plc (NYSE:AZN), around 4.42% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, designating 2.02 percent of its 13F equity portfolio to AZN.
Because AstraZeneca plc (NYSE:AZN) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of money managers who sold off their entire stakes in the third quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management sold off the largest stake of the 750 funds watched by Insider Monkey, comprising an estimated $51.1 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund dropped about $16.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to AstraZeneca plc (NYSE:AZN). We will take a look at Eli Lilly and Company (NYSE:LLY), Medtronic plc (NYSE:MDT), NextEra Energy, Inc. (NYSE:NEE), Bristol Myers Squibb Company (NYSE:BMY), Chevron Corporation (NYSE:CVX), Zoom Video Communications, Inc. (NASDAQ:ZM), and Union Pacific Corporation (NYSE:UNP). This group of stocks’ market caps resemble AZN’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 69 hedge funds with bullish positions and the average amount invested in these stocks was $4385 million. That figure was $2260 million in AZN’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand Chevron Corporation (NYSE:CVX) is the least popular one with only 43 bullish hedge fund positions. Compared to these stocks AstraZeneca plc (NYSE:AZN) is even less popular than CVX. Our overall hedge fund sentiment score for AZN is 26.1. 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. Hedge funds dodged a bullet by taking a bearish stance towards AZN. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th but managed to beat the market again by 16.4 percentage points. Unfortunately AZN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AZN investors were disappointed as the stock returned -8.4% since the end of the third quarter (through 12/18) 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 so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.