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Should You Avoid AmerisourceBergen Corp. (ABC)?

Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

AmerisourceBergen Corp. (NYSE:ABC) was in 38 hedge funds’ portfolios at the end of the third quarter of 2015. AmerisourceBergen Corp. (NYSE:ABC) has experienced a decrease in enthusiasm from smart money lately. There were 39 hedge funds in our database with AmerisourceBergen Corp. (NYSE:ABC) positions at the end of the previous quarter. At the end of this article, we will also compare AmerisourceBergen Corp. (NYSE:ABC) to other stocks, including Nidec Corporation (ADR) (NYSE:NJ), Prologis Inc (NYSE:PLD), and ARM Holdings plc (ADR) (NASDAQ:ARMH) to get a better sense of its popularity.

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At the moment, there are plenty of signals market participants use to assess stocks. Some of the best signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top money managers can outclass their index-focused peers by a very impressive amount (see the details here).

With all of this in mind, we’re going to take a glance at the key action regarding AmerisourceBergen Corp. (NYSE:ABC).

How have hedgies been trading AmerisourceBergen Corp. (NYSE:ABC)?

Heading into Q4, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 3% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the largest position in AmerisourceBergen Corp. (NYSE:ABC). AQR Capital Management has a $326.9 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Clifford Fox of Columbus Circle Investors, with a $94.7 million position; 0.8% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish consist of Panayotis Takis Sparaggis’ Alkeon Capital Management, Renaissance Technologies, and Ken Griffin’s Citadel Investment Group.

Since AmerisourceBergen Corp. (NYSE:ABC) has witnessed a falling interest from hedge fund managers, it’s safe to say that there is a sect of money managers that elected to cut their entire stakes heading into Q4. Intriguingly, Philip Hempleman’s Ardsley Partners cut the biggest stake of the 700 funds watched by Insider Monkey, comprising close to $12 million in stock. Peter Muller’s fund, PDT Partners, also sold off its stock, about $5.9 million worth of shares. These transactions are important to note, as aggregate hedge fund interest was cut by 1 fund heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to AmerisourceBergen Corp. (NYSE:ABC). These stocks are Nidec Corporation (ADR) (NYSE:NJ), Prologis Inc (NYSE:PLD), ARM Holdings plc (ADR) (NASDAQ:ARMH), and Fiserv, Inc. (NASDAQ:FISV). This group of stocks’ market caps matches AmerisourceBergen Corp. (NYSE:ABC)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NJ 4 5167 0
PLD 17 403248 -11
ARMH 17 243693 -4
FISV 21 360513 -1

As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $1.03 billion in AmerisourceBergen Corp. (NYSE:ABC)’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand, Nidec Corporation (ADR) (NYSE:NJ) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, AmerisourceBergen Corp. (NYSE:ABC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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