Is NBIX Stock A Buy or Sell?

In this article you are going to find out whether hedge funds think Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is NBIX stock a buy? Money managers were taking a pessimistic view. The number of long hedge fund positions fell by 7 in recent months. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) was in 31 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 45. Our calculations also showed that NBIX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 38 hedge funds in our database with NBIX positions at the end of the third quarter.

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 124 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 leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x 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. With all of this in mind we’re going to check out the fresh hedge fund action encompassing Neurocrine Biosciences, Inc. (NASDAQ:NBIX).

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

At the end of December, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in NBIX over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Perceptive Advisors, managed by Joseph Edelman, holds the number one position in Neurocrine Biosciences, Inc. (NASDAQ:NBIX). Perceptive Advisors has a $182 million position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $173.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, OrbiMed Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Copernicus Capital Management allocated the biggest weight to Neurocrine Biosciences, Inc. (NASDAQ:NBIX), around 4.61% of its 13F portfolio. Birchview Capital is also relatively very bullish on the stock, setting aside 4.43 percent of its 13F equity portfolio to NBIX.

Since Neurocrine Biosciences, Inc. (NASDAQ:NBIX) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedge funds who were dropping their positions entirely heading into Q1. At the top of the heap, Julian Baker and Felix Baker’s Baker Bros. Advisors dropped the biggest stake of all the hedgies monitored by Insider Monkey, totaling about $42.3 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dumped about $41.4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 7 funds heading into Q1.

Let’s now review hedge fund activity in other stocks similar to Neurocrine Biosciences, Inc. (NASDAQ:NBIX). We will take a look at Ascendis Pharma A/S (NASDAQ:ASND), AMERCO (NASDAQ:UHAL), RealPage, Inc. (NASDAQ:RP), AptarGroup, Inc. (NYSE:ATR), A. O. Smith Corporation (NYSE:AOS), Melco Resorts & Entertainment Limited (NASDAQ:MLCO), and Pentair plc (NYSE:PNR). This group of stocks’ market caps resemble NBIX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $1037 million. That figure was $936 million in NBIX’s case. RealPage, Inc. (NASDAQ:RP) is the most popular stock in this table. On the other hand AptarGroup, Inc. (NYSE:ATR) is the least popular one with only 20 bullish hedge fund positions. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NBIX is 38.3. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately NBIX wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on NBIX were disappointed as the stock returned -3.2% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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