We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Amneal Pharmaceuticals, Inc. (NYSE:AMRX) based on that data.
Hedge fund interest in Amneal Pharmaceuticals, Inc. (NYSE:AMRX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AMRX to other stocks including Golar LNG Limited (NASDAQ:GLNG), Infinera Corp. (NASDAQ:INFN), and Helix Energy Solutions Group Inc. (NYSE:HLX) to get a better sense of its popularity.
Joel Greenblatt of Gotham Asset Management
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the fresh hedge fund action regarding Amneal Pharmaceuticals, Inc. (NYSE:AMRX).
What does smart money think about Amneal Pharmaceuticals, Inc. (NYSE:AMRX)?
Heading into the first quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the third quarter of 2019. On the other hand, there were a total of 8 hedge funds with a bullish position in AMRX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Millennium Management held the most valuable stake in Amneal Pharmaceuticals, Inc. (NYSE:AMRX), which was worth $8.3 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $2.9 million worth of shares. Citadel Investment Group, Two Sigma Advisors, and D E Shaw 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 Algert Coldiron Investors allocated the biggest weight to Amneal Pharmaceuticals, Inc. (NYSE:AMRX), around 0.19% of its 13F portfolio. One68 Global Capital is also relatively very bullish on the stock, earmarking 0.16 percent of its 13F equity portfolio to AMRX.
Judging by the fact that Amneal Pharmaceuticals, Inc. (NYSE:AMRX) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their full holdings by the end of the third quarter. It’s worth mentioning that Steve Cohen’s Point72 Asset Management dumped the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at about $2.9 million in stock. Michael Platt and William Reeves’s fund, BlueCrest Capital Mgmt., also dumped its stock, about $0.1 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Amneal Pharmaceuticals, Inc. (NYSE:AMRX) but similarly valued. These stocks are Golar LNG Limited (NASDAQ:GLNG), Infinera Corp. (NASDAQ:INFN), Helix Energy Solutions Group Inc. (NYSE:HLX), and iRobot Corporation (NASDAQ:IRBT). All of these stocks’ market caps match AMRX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLNG | 19 | 254122 | -7 |
| INFN | 17 | 285686 | -1 |
| HLX | 20 | 46141 | 6 |
| IRBT | 13 | 50479 | 1 |
| Average | 17.25 | 159107 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $18 million in AMRX’s case. Helix Energy Solutions Group Inc. (NYSE:HLX) is the most popular stock in this table. On the other hand iRobot Corporation (NASDAQ:IRBT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Amneal Pharmaceuticals, Inc. (NYSE:AMRX) is even less popular than IRBT. Hedge funds dodged a bullet by taking a bearish stance towards AMRX. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but managed to beat the market by 12.9 percentage points. Unfortunately AMRX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); AMRX investors were disappointed as the stock returned -30.7% during the same time period 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 so far in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
