Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) changed recently.
Is BMRN a good stock to buy now? BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) was in 44 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 54. BMRN has seen a decrease in support from the world’s most elite money managers recently. There were 45 hedge funds in our database with BMRN positions at the end of the second quarter. Our calculations also showed that BMRN 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.
At the moment there are a large number of tools stock traders have at their disposal to size up their holdings. A couple of the most useful tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass the broader indices by a healthy margin (see the details here).
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 cannabis tech 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. Now we’re going to take a look at the recent hedge fund action surrounding BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
Do Hedge Funds Think BMRN Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from one quarter earlier. By comparison, 49 hedge funds held shares or bullish call options in BMRN 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.
More specifically, Baker Bros. Advisors was the largest shareholder of BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), with a stake worth $577.4 million reported as of the end of September. Trailing Baker Bros. Advisors was Citadel Investment Group, which amassed a stake valued at $188.5 million. Avoro Capital Advisors (venBio Select Advisor), Palo Alto Investors, and Point72 Asset 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 Copernicus Capital Management allocated the biggest weight to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), around 11.97% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, setting aside 7.23 percent of its 13F equity portfolio to BMRN.
Because BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) has witnessed falling interest from hedge fund managers, we can see that there was a specific group of fund managers who sold off their positions entirely in the third quarter. At the top of the heap, Brian Ashford-Russell and Tim Woolley’s Polar Capital cut the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $23.7 million in stock, and McKinley Capital Management was right behind this move, as the fund said goodbye to about $13.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). We will take a look at C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Cardinal Health, Inc. (NYSE:CAH), IDEX Corporation (NYSE:IEX), Baker Hughes Company (NYSE:BKR), Genuine Parts Company (NYSE:GPC), FMC Corporation (NYSE:FMC), and Duke Realty Corporation (NYSE:DRE). All of these stocks’ market caps match BMRN’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 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $491 million. That figure was $1573 million in BMRN’s case. Cardinal Health, Inc. (NYSE:CAH) is the most popular stock in this table. On the other hand C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is the least popular one with only 22 bullish hedge fund positions. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BMRN is 76.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately BMRN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BMRN were disappointed as the stock returned 3.6% since the end of September (through 12/8) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.