A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN).
Is BHVN a good stock to buy? Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) investors should pay attention to a decrease in hedge fund interest in recent months. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 42. Our calculations also showed that BHVN 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 take a look at the recent hedge fund action surrounding Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN).
Do Hedge Funds Think BHVN 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 -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BHVN over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Marshall Wace LLP held the most valuable stake in Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), which was worth $164.3 million at the end of the third quarter. On the second spot was Kingdon Capital which amassed $85.2 million worth of shares. Polar Capital, Armistice Capital, and Knoll Capital Management 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 Knoll Capital Management allocated the biggest weight to Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), around 45.68% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, dishing out 9.56 percent of its 13F equity portfolio to BHVN.
Because Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of fund managers that decided to sell off their positions entirely heading into Q4. At the top of the heap, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management dumped the biggest investment of the 750 funds watched by Insider Monkey, comprising an estimated $14.9 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund dropped about $5.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 9 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN). We will take a look at FTI Consulting, Inc. (NYSE:FCN), Curtiss-Wright Corp. (NYSE:CW), QTS Realty Trust Inc (NYSE:QTS), Shift4 Payments, Inc. (NYSE:FOUR), Parsley Energy Inc (NYSE:PE), Qualys Inc (NASDAQ:QLYS), and Rackspace Technology, Inc. (NASDAQ:RXT). This group of stocks’ market values match BHVN’s market value.
|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 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $752 million in BHVN’s case. FTI Consulting, Inc. (NYSE:FCN) is the most popular stock in this table. On the other hand Rackspace Technology, Inc. (NASDAQ:RXT) is the least popular one with only 15 bullish hedge fund positions. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BHVN is 60.5. 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 20 most popular stocks among hedge funds 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 and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on BHVN as the stock returned 41.1% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.