At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Biogen Inc. (NASDAQ:BIIB) makes for a good investment right now.
Is BIIB a good stock to buy now? Biogen Inc. (NASDAQ:BIIB) has seen a decrease in enthusiasm from smart money of late. Biogen Inc. (NASDAQ:BIIB) was in 59 hedge funds’ portfolios at the end of September. The all time high for this statistics is 81. Our calculations also showed that BIIB 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Keeping this in mind we’re going to take a peek at the new hedge fund action regarding Biogen Inc. (NASDAQ:BIIB).
Hedge fund activity in Biogen Inc. (NASDAQ:BIIB)
At Q3’s end, a total of 59 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 53 hedge funds with a bullish position in BIIB a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the biggest position in Biogen Inc. (NASDAQ:BIIB), worth close to $1.0828 billion, corresponding to 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $627.9 million position; 1.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish include Samuel Isaly’s OrbiMed Advisors, Warren Buffett’s Berkshire Hathaway and Alex Denner’s Sarissa Capital Management. In terms of the portfolio weights assigned to each position Sarissa Capital Management allocated the biggest weight to Biogen Inc. (NASDAQ:BIIB), around 21.47% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, setting aside 14.2 percent of its 13F equity portfolio to BIIB.
Because Biogen Inc. (NASDAQ:BIIB) has faced bearish sentiment from the smart money, it’s easy to see that there were a few hedge funds that slashed their entire stakes last quarter. At the top of the heap, Zach Schreiber’s Point State Capital dropped the largest position of all the hedgies monitored by Insider Monkey, valued at about $15.2 million in stock, and Ian Simm’s Impax Asset Management was right behind this move, as the fund sold off about $7.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Biogen Inc. (NASDAQ:BIIB) but similarly valued. These stocks are Westpac Banking Corporation (NYSE:WBK), Relx PLC (NYSE:RELX), Analog Devices, Inc. (NASDAQ:ADI), Lululemon Athletica inc. (NASDAQ:LULU), CNOOC Limited (NYSE:CEO), Koninklijke Philips NV (NYSE:PHG), and Veeva Systems Inc (NYSE:VEEV). This group of stocks’ market valuations are similar to BIIB’s market valuation.
|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 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $861 million. That figure was $3237 million in BIIB’s case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Biogen Inc. (NASDAQ:BIIB) is more popular among hedge funds. Our overall hedge fund sentiment score for BIIB is 72.9. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Unfortunately BIIB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BIIB were disappointed as the stock returned -13% since the end of the third quarter (through 12/2) 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.