Was The Smart Money Right About Amgen (AMGN)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Amgen, Inc. (NASDAQ:AMGN) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is Amgen, Inc. (NASDAQ:AMGN) the right investment to pursue these days? The best stock pickers were in a bullish mood. The number of long hedge fund positions rose by 4 in recent months. Amgen, Inc. (NASDAQ:AMGN) was in 49 hedge funds’ portfolios at the end of December. The all time high for this statistic is 73. Our calculations also showed that AMGN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Michael Castor Sio Capital

Michael Castor of Sio Capital

At Insider Monkey we leave no stone unturned when looking for 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 best hydrogen fuel cell stocks to pick the next Tesla 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. Now let’s review the recent hedge fund action encompassing Amgen, Inc. (NASDAQ:AMGN).

Do Hedge Funds Think AMGN Is A Good Stock To Buy Now?

At Q4’s end, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in AMGN over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, AQR Capital Management was the largest shareholder of Amgen, Inc. (NASDAQ:AMGN), with a stake worth $239.5 million reported as of the end of December. Trailing AQR Capital Management was Pzena Investment Management, which amassed a stake valued at $118.1 million. Adage Capital Management, Woodline Partners, 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 Woodline Partners allocated the biggest weight to Amgen, Inc. (NASDAQ:AMGN), around 3.05% of its 13F portfolio. Arjuna Capital is also relatively very bullish on the stock, earmarking 2.2 percent of its 13F equity portfolio to AMGN.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Woodline Partners, managed by Michael Rockefeller and Karl Kroeker, initiated the largest position in Amgen, Inc. (NASDAQ:AMGN). Woodline Partners had $115.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $44.5 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Michael Castor’s Sio Capital, and Ray Dalio’s Bridgewater Associates.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Amgen, Inc. (NASDAQ:AMGN) but similarly valued. We will take a look at BHP Group (NYSE:BBL), HDFC Bank Limited (NYSE:HDB), Charter Communications, Inc. (NASDAQ:CHTR), AstraZeneca plc (NASDAQ:AZN), Philip Morris International Inc. (NYSE:PM), Citigroup Inc. (NYSE:C), and Starbucks Corporation (NASDAQ:SBUX). This group of stocks’ market valuations are closest to AMGN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBL 18 1215975 2
HDB 31 1535194 -3
CHTR 90 11274858 2
AZN 41 2983928 8
PM 52 4426846 2
C 95 7120499 4
SBUX 67 4990840 1
Average 56.3 4792591 2.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 56.3 hedge funds with bullish positions and the average amount invested in these stocks was $4793 million. That figure was $1040 million in AMGN’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand BHP Group (NYSE:BBL) is the least popular one with only 18 bullish hedge fund positions. Amgen, Inc. (NASDAQ:AMGN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMGN is 49.3. 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 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and surpassed the market again by 1.6 percentage points. Unfortunately AMGN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AMGN investors were disappointed as the stock returned 5% since the end of December (through 4/30) 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.