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Were Hedge Funds Right About Piling Into BioMarin Pharmaceutical Inc. (BMRN)?

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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) and determine whether the smart money was really smart about this stock.

BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) investors should be aware of an increase in hedge fund sentiment lately. BMRN was in 54 hedge funds’ portfolios at the end of March. There were 49 hedge funds in our database with BMRN holdings at the end of the previous quarter. Our calculations also showed that BMRN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most investors, hedge funds are viewed as underperforming, old financial tools of years past. While there are over 8000 funds with their doors open at the moment, Our researchers look at the crème de la crème of this group, about 850 funds. These investment experts orchestrate the majority of the hedge fund industry’s total asset base, and by tracking their best investments, Insider Monkey has unsheathed numerous investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

TUDOR INVESTMENT CORP

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the new hedge fund action regarding BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).

How are hedge funds trading BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)?

At Q1’s end, a total of 54 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 41 hedge funds with a bullish position in BMRN 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.

Is BMRN A Good Stock To Buy?

The largest stake in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) was held by Baker Bros. Advisors, which reported holding $641.3 million worth of stock at the end of September. It was followed by Avoro Capital Advisors (venBio Select Advisor) with a $163.1 million position. Other investors bullish on the company included Palo Alto Investors, Viking Global, and Zevenbergen Capital Investments. In terms of the portfolio weights assigned to each position Palo Alto Investors allocated the biggest weight to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), around 10.93% of its 13F portfolio. Copernicus Capital Management is also relatively very bullish on the stock, setting aside 10.55 percent of its 13F equity portfolio to BMRN.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the biggest position in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). Adage Capital Management had $28.3 million invested in the company at the end of the quarter. Henrik Rhenman’s Rhenman & Partners Asset Management also initiated a $15.6 million position during the quarter. The following funds were also among the new BMRN investors: David Harding’s Winton Capital Management, Vishal Saluja and Pham Quang’s Endurant Capital Management, and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) but similarly valued. We will take a look at Marvell Technology Group Ltd. (NASDAQ:MRVL), Okta, Inc. (NASDAQ:OKTA), Carrier Global Corporation (NYSE:CARR), and Slack Technologies Inc (NYSE:WORK). All of these stocks’ market caps are closest to BMRN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MRVL 29 498283 0
OKTA 48 1086612 9
CARR 3 9338 3
WORK 31 465454 2
Average 27.75 514922 3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $515 million. That figure was $1567 million in BMRN’s case. Okta, Inc. (NASDAQ:OKTA) is the most popular stock in this table. On the other hand Carrier Global Corporation (NYSE:CARR) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is more popular among hedge funds. 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on BMRN as the stock returned 46% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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