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 Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) and determine whether hedge funds skillfully traded this stock.
Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) shareholders have witnessed an increase in hedge fund sentiment of late. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) was in 34 hedge funds’ portfolios at the end of June. The all time high for this statistics is 49. There were 29 hedge funds in our database with JAZZ positions at the end of the first quarter. Our calculations also showed that JAZZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 today’s marketplace there are plenty of methods shareholders employ to analyze stocks. Some of the less known methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the S&P 500 by a solid margin (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Keeping this in mind let’s take a glance at the key hedge fund action surrounding Jazz Pharmaceuticals Plc (NASDAQ:JAZZ).
What does smart money think about Jazz Pharmaceuticals Plc (NASDAQ:JAZZ)?
At second quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JAZZ over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), which was worth $383.8 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $211 million worth of shares. Citadel Investment Group, Sarissa Capital Management, and Millennium 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 Sarissa Capital Management allocated the biggest weight to Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), around 11.39% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, designating 5.35 percent of its 13F equity portfolio to JAZZ.
As aggregate interest increased, key money managers were breaking ground themselves. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the biggest position in Jazz Pharmaceuticals Plc (NASDAQ:JAZZ). Adage Capital Management had $24.8 million invested in the company at the end of the quarter. Michael Rockefeller and KarláKroeker’s Woodline Partners also made a $11.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, Donald Sussman’s Paloma Partners, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) but similarly valued. We will take a look at Ares Capital Corporation (NASDAQ:ARCC), National Retail Properties, Inc. (NYSE:NNN), Lumentum Holdings Inc (NASDAQ:LITE), Smartsheet Inc. (NYSE:SMAR), SYNNEX Corporation (NYSE:SNX), OGE Energy Corp. (NYSE:OGE), and Syneos Health, Inc. (NASDAQ:SYNH). This group of stocks’ market valuations are closest to JAZZ’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 29 hedge funds with bullish positions and the average amount invested in these stocks was $568 million. That figure was $1164 million in JAZZ’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand National Retail Properties, Inc. (NYSE:NNN) is the least popular one with only 17 bullish hedge fund positions. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JAZZ is 59.1. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on JAZZ as the stock returned 21.8% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.