Is Pfizer Inc. (NYSE:PFE) Going to Burn These Hedge Funds?

It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Pfizer Inc. (NYSE:PFE) during the quarter below.

Pfizer PFE pharmaceutical stock

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Pfizer Inc. (NYSE:PFE) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. PFE was in 97 hedge funds’ portfolios at the end of the third quarter of 2015. There were 85 hedge funds in our database with PFE holdings at the end of the previous quarter.

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Now, let’s view the latest action regarding Pfizer Inc. (NYSE:PFE).

What does the smart money think about Pfizer Inc. (NYSE:PFE)?

At the end of the third quarter, a total of 97 of the hedge funds tracked by Insider Monkey were long in this stock, a change of 14% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes significantly.

According to hedge fund intelligence website Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Pfizer Inc. (NYSE:PFE). Fisher Asset Management has a $1.00 billion position in the stock, comprising 2.1% of its 13F portfolio. The second-most bullish hedge fund manager is AQR Capital Management, led by Cliff Asness, holding a $531.3 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of D. E. Shaw’s D E Shaw, Rob Citrone’s Discovery Capital Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.

Now, specific money managers were breaking ground themselves. Discovery Capital Management established the most outsized position in Pfizer Inc. (NYSE:PFE), as it had $302.9 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $217.9 million investment in the stock during the quarter. Some other funds with brand new PFE positions were Leon Cooperman’s Omega Advisors, Arthur B Cohen and Joseph Healey’s Healthcor Management LP, and Michael A. Price and Amos Meron’s Empyrean Capital Partners.

Let’s also review hedge fund activity in other stocks similar to Pfizer Inc. (NYSE:PFE). These stocks are Toyota Motor Corporation (ADR) (NYSE:TM), Verizon Communications Inc. (NYSE:VZ), The Coca-Cola Company (NYSE:KO), and The Walt Disney Company (NYSE:DIS). This group of stocks’ market caps resemble PFE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TM 13 229565 2
VZ 59 2525387 -3
KO 54 19334449 -8
DIS 48 3367786 -12

As you can see these stocks had an average of 43.5 hedge funds with bullish positions and the average amount invested in these stocks was $6.36 billion.

Despite healthcare sector headwinds, elite investors were moving into Pfizer at a brisk pace. As such, we believe that investors should look further into this stock and consider adding it to their own portfolios should they like what they see.

Disclosure: None