At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Pfizer Inc. (NYSE:PFE) makes for a good investment right now.
Is PFE stock a buy or sell? Pfizer Inc. (NYSE:PFE) was in 63 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 119. PFE has seen a decrease in hedge fund interest recently. There were 66 hedge funds in our database with PFE positions at the end of the third quarter. Our calculations also showed that PFE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article). Now let’s take a look at the recent hedge fund action regarding Pfizer Inc. (NYSE:PFE).
Do Hedge Funds Think PFE Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. By comparison, 62 hedge funds held shares or bullish call options in PFE a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Pfizer Inc. (NYSE:PFE) was held by Diamond Hill Capital, which reported holding $337.9 million worth of stock at the end of December. It was followed by Two Sigma Advisors with a $268.9 million position. Other investors bullish on the company included Citadel Investment Group, AQR Capital Management, and OrbiMed Advisors. In terms of the portfolio weights assigned to each position Game Creek Capital allocated the biggest weight to Pfizer Inc. (NYSE:PFE), around 4.9% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, dishing out 4.33 percent of its 13F equity portfolio to PFE.
Because Pfizer Inc. (NYSE:PFE) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that elected to cut their full holdings by the end of the fourth quarter. At the top of the heap, Warren Buffett’s Berkshire Hathaway sold off the largest position of the “upper crust” of funds tracked by Insider Monkey, comprising about $136.2 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $54.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds by the end of the fourth quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pfizer Inc. (NYSE:PFE) but similarly valued. These stocks are salesforce.com, inc. (NYSE:CRM), Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), Oracle Corporation (NYSE:ORCL), AbbVie Inc (NYSE:ABBV), Cisco Systems, Inc. (NASDAQ:CSCO), and Thermo Fisher Scientific Inc. (NYSE:TMO). This group of stocks’ market valuations are similar to PFE’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 73.9 hedge funds with bullish positions and the average amount invested in these stocks was $5760 million. That figure was $1848 million in PFE’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Oracle Corporation (NYSE:ORCL) is the least popular one with only 52 bullish hedge fund positions. Pfizer Inc. (NYSE:PFE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PFE is 30.1. 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. This is a slightly negative signal and 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 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately PFE wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); PFE investors were disappointed as the stock returned -2.4% since the end of December (through 3/19) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.