Is Moderna, Inc. (MRNA) A Good Stock To Buy?

In this article we will analyze whether Moderna, Inc. (NASDAQ:MRNA) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is MRNA a good stock to buy? The best stock pickers were becoming less hopeful. The number of long hedge fund bets dropped by 2 in recent months. Moderna, Inc. (NASDAQ:MRNA) was in 39 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that MRNA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a look at the new hedge fund action regarding Moderna, Inc. (NASDAQ:MRNA).

Do Hedge Funds Think MRNA Is A Good Stock To Buy Now?

At the end of March, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in MRNA a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

More specifically, Theleme Partners was the largest shareholder of Moderna, Inc. (NASDAQ:MRNA), with a stake worth $825.3 million reported as of the end of March. Trailing Theleme Partners was Citadel Investment Group, which amassed a stake valued at $336.1 million. Renaissance Technologies, Coatue Management, 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 Theleme Partners allocated the biggest weight to Moderna, Inc. (NASDAQ:MRNA), around 27.62% of its 13F portfolio. Heathbridge Capital Management is also relatively very bullish on the stock, designating 5.19 percent of its 13F equity portfolio to MRNA.

Since Moderna, Inc. (NASDAQ:MRNA) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds who were dropping their full holdings heading into Q2. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest investment of all the hedgies tracked by Insider Monkey, worth close to $23.5 million in stock. Doug Silverman and Alexander Klabin’s fund, Senator Investment Group, also dropped its stock, about $15.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds heading into Q2.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Moderna, Inc. (NASDAQ:MRNA) but similarly valued. We will take a look at Edwards Lifesciences Corporation (NYSE:EW), Honda Motor Co Ltd (NYSE:HMC), Vodafone Group Plc (NASDAQ:VOD), Aon plc (NYSE:AON), Koninklijke Philips NV (NYSE:PHG), General Dynamics Corporation (NYSE:GD), and Spotify Technology S.A. (NYSE:SPOT). This group of stocks’ market valuations are similar to MRNA’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $2781 million. That figure was $1640 million in MRNA’s case. Aon plc (NYSE:AON) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 11 bullish hedge fund positions. Moderna, Inc. (NASDAQ:MRNA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRNA is 54.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on MRNA as the stock returned 68% since the end of Q1 (through 6/25) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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