Were Hedge Funds Right About Gilead Sciences, Inc. (GILD)?

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 6 years and analyze what the smart money thinks of Gilead Sciences, Inc. (NASDAQ:GILD) based on that data.

Gilead Sciences, Inc. (NASDAQ:GILD) was in 65 hedge funds’ portfolios at the end of March. The all time high for this statistic is 93. GILD shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 72 hedge funds in our database with GILD holdings at the end of December. Our calculations also showed that GILD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

According to most market participants, hedge funds are assumed to be unimportant, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, Our experts choose to focus on the elite of this club, approximately 850 funds. These investment experts control bulk of all hedge funds’ total capital, and by tracking their top equity investments, Insider Monkey has determined numerous investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website.

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 best EV 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 we’re going to review the key hedge fund action regarding Gilead Sciences, Inc. (NASDAQ:GILD).

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

At the end of March, a total of 65 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in GILD over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the largest position in Gilead Sciences, Inc. (NASDAQ:GILD). Renaissance Technologies has a $424 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $396.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish include John W. Rogers’s Ariel Investments, Alex Denner’s Sarissa Capital Management and Matthew Stadelman’s Diamond Hill Capital. In terms of the portfolio weights assigned to each position Sarissa Capital Management allocated the biggest weight to Gilead Sciences, Inc. (NASDAQ:GILD), around 16.71% of its 13F portfolio. Healthcare Value Capital is also relatively very bullish on the stock, dishing out 10.8 percent of its 13F equity portfolio to GILD.

Due to the fact that Gilead Sciences, Inc. (NASDAQ:GILD) has faced declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedgies who sold off their positions entirely heading into Q2. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest stake of the 750 funds monitored by Insider Monkey, totaling close to $179.6 million in stock, and Jeremy Green’s Redmile Group was right behind this move, as the fund dumped about $133.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 7 funds heading into Q2.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Gilead Sciences, Inc. (NASDAQ:GILD) but similarly valued. These stocks are Automatic Data Processing, Inc. (NASDAQ:ADP), Fiserv, Inc. (NASDAQ:FISV), Infosys Limited (NYSE:INFY), The TJX Companies, Inc. (NYSE:TJX), Snap Inc. (NYSE:SNAP), Prologis Inc (NYSE:PLD), and Truist Financial Corporation (NYSE:TFC). All of these stocks’ market caps are closest to GILD’s market cap.

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As you can see these stocks had an average of 50.6 hedge funds with bullish positions and the average amount invested in these stocks was $2282 million. That figure was $2690 million in GILD’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 26 bullish hedge fund positions. Gilead Sciences, Inc. (NASDAQ:GILD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GILD is 58.8. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6th and beat the market again by 6.7 percentage points. Unfortunately GILD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GILD were disappointed as the stock returned 7.5% since the end of March (through 8/6) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.