Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 823 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about AstraZeneca plc (NYSE:AZN).
Is AstraZeneca plc (NYSE:AZN) a buy right now? The best stock pickers were becoming more confident. The number of bullish hedge fund positions went up by 12 in recent months. AstraZeneca plc (NYSE:AZN) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AZN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 26 hedge funds in our database with AZN holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are many tools stock traders can use to analyze their holdings. A duo of the less utilized tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a superb amount (see the details here).
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now let’s take a look at the key hedge fund action surrounding AstraZeneca plc (NYSE:AZN).
What does smart money think about AstraZeneca plc (NYSE:AZN)?
At second quarter’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 46% from the first quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in AZN a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in AstraZeneca plc (NYSE:AZN), which was worth $895.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $428.5 million worth of shares. Renaissance Technologies, Balyasny Asset Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to AstraZeneca plc (NYSE:AZN), around 4.8% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, earmarking 4.79 percent of its 13F equity portfolio to AZN.
Consequently, key hedge funds were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the biggest position in AstraZeneca plc (NYSE:AZN). Two Sigma Advisors had $41.9 million invested in the company at the end of the quarter. Christopher James’s Partner Fund Management also initiated a $33.6 million position during the quarter. The following funds were also among the new AZN investors: Brandon Haley’s Holocene Advisors, Israel Englander’s Millennium Management, and Guy Levy’s Soleus Capital.
Let’s also examine hedge fund activity in other stocks similar to AstraZeneca plc (NYSE:AZN). These stocks are Amgen, Inc. (NASDAQ:AMGN), China Mobile Limited (NYSE:CHL), McDonald’s Corporation (NYSE:MCD), Accenture Plc (NYSE:ACN), Costco Wholesale Corporation (NASDAQ:COST), Bristol Myers Squibb Company (NYSE:BMY), and T-Mobile US, Inc. (NYSE:TMUS). All of these stocks’ market caps resemble AZN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMGN | 51 | 1794209 | -1 |
| CHL | 9 | 456289 | -2 |
| MCD | 57 | 1356732 | -9 |
| ACN | 44 | 1080127 | -5 |
| COST | 61 | 4730681 | -7 |
| BMY | 136 | 6605597 | 10 |
| TMUS | 113 | 7158311 | 48 |
| Average | 67.3 | 3311707 | 4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 67.3 hedge funds with bullish positions and the average amount invested in these stocks was $3312 million. That figure was $1921 million in AZN’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 9 bullish hedge fund positions. AstraZeneca plc (NYSE:AZN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AZN is 51.4. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and surpassed the market again by 20.1 percentage points. Unfortunately AZN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AZN investors were disappointed as the stock returned -4.4% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.
