It is common knowledge that there are numerous strategies for picking good stocks, but the art of stock-picking is quite cumbersome and complex for most investors. There are thousands of stocks to choose from, so how can individual investors select good stocks or at least avoid bad stocks? Choosing stocks based on a particular criteria using stock screeners might represent a suitable option, but this method can eliminate some high-potential stocks that could possibly generate big trading profits. Before proceeding to the stock selection process, individual investors should clearly formulate the purpose of their portfolios. Depending on whether investors are looking to generate current income or capital appreciation, the pool of stock candidates can differ. Moving on to the stock selection process, investors can also select potential equity investments by examining the basket of most-favored stocks among top hedge fund managers. This basket includes both income and growth stocks, and both small-cap and large-cap stocks, so investors will definitely find something that suits their investment strategies. With this in mind, let’s take a look at the recent hedge fund activity surrounding Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA).
Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has been a busy little bee of late, and that activity has wooed more hedge funds to put their money behind it. After purchasing Allergan PLC (NYSE:AGN)’s generics drug business for $40.5 billion in the third quarter, Teva agreed to purchase Mexico’s Representaciones e Investigaciones Médicas SA (Rimsa) for $2.3 billion at the beginning of the fourth quarter, a deal which has just been completed. As Teva continues to bolster itself with acquisitions, elite investors tracked by Insider Monkey have been bolstering their own portfolios with the company’s shares. 81 such investors were long Teva at the end of 2015, holding $9.74 billion worth of the company’s shares. Those figures were up from 70 and $6.80 billion respectively on September 30. At the end of this article we will also compare TEVA to other stocks including Ford Motor Company (NYSE:F), Texas Instruments Incorporated (NASDAQ:TXN), and Barclays PLC (ADR) (NYSE:BCS) to get a better sense of its popularity among these investors.
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The aforementioned deals are expected to push Teva’s earnings to new heights, with management anticipating double-digit EPS accretion in 2016 from the Allergan deal, followed by 20% in 2017 and 2018. The Rimsa deal meanwhile makes Teva one of the largest pharmaceutical companies in Mexico, one of the world’s leading emerging markets. However, despite a leading position in the generics market, which is expected to see a greater than 50% revenue increase from 2014 levels by 2018, and a stock that is trading at late-2014 levels, there is still a lot of pressure being put on Teva shares from short sellers, who have ruthlessly attacked big pharma stocks given the controversy and concerns surrounding the industry right now. Short interest in Teva reached 15.14 million shares in mid-February, hitting a 52-week high and shares are down by 15% year-to-date.
With all of this in mind, we’re going to go over the fresh hedge fund action surrounding Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) during the fourth quarter on the next page.