The Most Popular French Stocks Among Hedge Funds

French president François Hollande was recently quoted as saying “ça va mieux” of his country’s economy, which means that things are improving. The French economy, the second-largest in the Eurozone, has been struggling since 2012, recording three straight years of virtually zero growth, while the country’s unemployment rate has increased to 10.2% from 9.8% in 2012. The French economy suffered in the final quarter of 2015 due to the terrorist attacks in Paris in November, which discouraged international tourists from visiting the country and its capital. However, the primary growth driver of the French economy, consumer spending, has recovered strongly in recent quarters.

In the first quarter of 2016, the French economy grew faster than anticipated thanks to a boost from greater consumption, although investment declined for a seventh-consecutive month. As France is home to some of the biggest companies in the Eurozone and worldwide, investors should consider gaining some exposure to French stocks. For that reason, Insider Monkey decided to lay out a list of five French companies trading on U.S. stock exchanges that are loved by the select group of hedge funds that are tracked by Insider Monkey.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

#5. Total SA (ADR) (NYSE:TOT)

– Hedge Funds With Long Positions (as of March 31): 10

– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $56.44 Million

The hedge fund sentiment towards Total SA (ADR) (NYSE:TOT) remained unchanged at ten during the first quarter of 2016, among the funds in our system, while the overall value of those funds’ equity investments in the company fell by 2% quarter-over-quarter to $56.44 million. The international oil and gas company, which is also active in new energy sources such as solar energy and biomass, has seen its market value jump by 6% since the beginning of 2016. In early May, Total SA reached an agreement to buy Saft Groupe SA, a French designer and manufacturer of batteries for industrial and defense applications. The acquisition is part of the company’s strategy to diversify away from the highly volatile crude oil industry. Total SA recorded net income of $1.61 billion for the first quarter of 2016, down steeply from $2.66 billion in the first quarter of 2015, mainly due to weaker performance of the company’s upstream business segment. Steve Cohen’s Point72 Asset Management owns 78,950 American Depositary Shares (ADS’s) of Total SA (ADR) (NYSE:TOT) as of March 31.

The next two pages of this article will reveal four other French stocks favored by the hedge funds monitored by our team.

#4. Flamel Technologies S.A. (ADR) (NASDAQ:FLML)

– Hedge Funds With Long Positions (as of March 31): 10

– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $119.65 Million

Flamel Technologies S.A. (ADR) (NASDAQ:FLML) fell out of favor with the hedge fund vehicles followed by Insider Monkey during the first three months of 2016, with the number of funds invested in the company falling to ten from 14 quarter-over-quarter. The overall value of those funds’ long positions in the company also shrank by 11% to $119.65 million. The ten money managers long the stock amassed almost 27% of the company’s outstanding common stock. In late April, the France-based specialty pharmaceutical company received FDA approval for its third unapproved marketed drug called Akovaz, which represents the company’s formation of ephedrine sulfate injection. Flamel Technologies plans to begin marketing the product in the third quarter of 2016, thus unlocking a new revenue stream. The sales of the company’s Bloziverz have been impacted by the entrance of a third competitor to the neostigmine market in December, which is anticipated to put pressure on the market share of Flamel’s drug. Kevin Kotler’s Broadfin Capital had 4.39 million ADS’s of Flamel Technologies S.A. (ADR) (NASDAQ:FLML) in its portfolio at the end of March.

#3. DBV Technologies SA – ADR (NASDAQ:DBVT)

– Hedge Funds With Long Positions (as of March 31): 12

– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $280.21 Million

There were 12 asset managers tracked by our team with stakes in DBV Technologies SA – ADR (NASDAQ:DBVT) at the end of the first quarter, down from 16 registered at the end of the December quarter. Similarly, the aggregate value of those collective stakes fell by 9% quarter-over-quarter to $280.21 million. Nearly 37% of the company’s outstanding shares were being hoarded by the money managers in our system. In late May, the French clinical-stage specialty biopharmaceutical company announced that it had inked a collaboration agreement with food giant Nestle Group to develop a cow’s milk allergy diagnostic test for babies and young children. The biotechnology upstart is well-known for its focus on innovative tests for children suffering from food allergies for which there are no FDA-approved treatments just yet. Nestle will pay DBV Technologies an upfront payment of €10 million, as well as up to an additional €100 million in milestone incentive payments. DBV’s ADS’s are down by 8% year-to-date. Baker Bros. Advisors, run by Julian Baker and Felix Baker, owns 5.51 million ADS’s of DBV Technologies SA – ADR (NASDAQ:DBVT) as of the end of the first quarter.

The final page of this article will reveal the two French stocks most favored by the hedge funds tracked by Insider Monkey.

#2. Criteo SA (ADR) (NASDAQ:CRTO)

– Hedge Funds With Long Positions (as of March 31): 14

– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $194.68 Million

The number of hedge fund firms that we track with long positions in Criteo SA (ADR) (NASDAQ:CRTO) climbed to 14 from 13 during the January-to-March quarter, whereas the overall value of those positions fell by 23% to $194.68 million, despite a 4% gain in the value of Criteo ADS’s. In mid-June, the France-based ad tech company filed a lawsuit against industry rival SteelHouse, alleging that SteelHouse ran a “counterfeit click fraud scheme” that tricked e-tailers “into attributing sales to SteelHouse that should have been attributed to Criteo, other competitors and partners, or direct traffic.” The global technology company specialized in digital performance marketing reported revenue of $401.25 million for the first quarter of 2016, up from $294.17 million recorded a year earlier. Criteo’s ADS’s have gained 10% since the beginning of 2016. Eric Mindich’s Eton Park Capital reported owning 1.06 million ADS’s of Criteo SA (ADR) (NASDAQ:CRTO) in its latest 13F filing.

#1. Sanofi SA (ADR) (NYSE:SNY)

– Hedge Funds With Long Positions (as of March 31): 30

– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $813.53 Million

A total of 30 asset managers tracked by Insider Monkey were invested in Sanofi SA (ADR) (NYSE:SNY) at the end of the first quarter, with the aggregate value of those money managers’ stakes in Sanofi decreasing by 15% quarter-over-quarter to $813.53 million. In late May, the French drug marker commenced a proxy fight to replace Medivation Inc. (NASDAQ:MDVN)’s entire Board after the California-based cancer therapy marker rejected a $9.3 billion takeover bid. However, Sanofi stopped the fight shortly thereafter and instead joined the battle with other bidders seeking to buy Medivation. The target’s appeal relates to an experimental drug called talazoparib, which is under development for the treatment of breast cancer. Andy Redleaf’s Whitebox Advisors had 16.16 million ADS’s of Sanofi SA (ADR) (NYSE:SNY) among its holdings at the end of March.

Disclosure: None