In this article we will take a look at whether hedge funds think BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is BMRN stock a buy or sell? BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) was in 51 hedge funds' portfolios at the end of December. The all time high for this statistic is 54. BMRN has seen an increase in support from the world's most elite money managers lately. There were 44 hedge funds in our database with BMRN holdings at the end of September. Our calculations also showed that BMRN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the 21st century investor’s toolkit there are plenty of signals investors have at their disposal to grade stocks. Some of the most underrated signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best money managers can trounce their index-focused peers by a superb margin (see the details here).
Felix Baker - Baker Bros.
Felix Baker of Baker Bros.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article).With all of this in mind let's analyze the recent hedge fund action surrounding BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
Do Hedge Funds Think BMRN Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 51 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. By comparison, 49 hedge funds held shares or bullish call options in BMRN a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Baker Bros. Advisors held the most valuable stake in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), which was worth $665.5 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $262.7 million worth of shares. Palo Alto Investors, Avoro Capital Advisors (venBio Select Advisor), 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 Copernicus Capital Management allocated the biggest weight to BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), around 14.65% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, setting aside 9.91 percent of its 13F equity portfolio to BMRN.
Now, key hedge funds have jumped into BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) headfirst. Deerfield Management, managed by James E. Flynn, created the biggest position in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). Deerfield Management had $14.3 million invested in the company at the end of the quarter. Karim Abbadi and Edward McBride's Centiva Capital also made a $2.7 million investment in the stock during the quarter. The other funds with brand new BMRN positions are Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Greg Martinez's Parkman Healthcare Partners, and Benjamin A. Smith's Laurion Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) but similarly valued. These stocks are SK Telecom Co., Ltd. (NYSE:SKM), GoodRx Holdings, Inc. (NASDAQ:GDRX), Korea Electric Power Corporation (NYSE:KEP), Ceridian HCM Holding Inc. (NYSE:CDAY), Cardinal Health, Inc. (NYSE:CAH), Albemarle Corporation (NYSE:ALB), and Live Nation Entertainment, Inc. (NYSE:LYV). This group of stocks' market caps match BMRN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SKM,4,104096,0 GDRX,32,556602,-9 KEP,7,20539,2 CDAY,26,1281564,-10 CAH,49,1142309,4 ALB,21,126278,-6 LYV,46,1629672,-4 Average,26.4,694437,-3.3 [/table]
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $694 million. That figure was $1671 million in BMRN's case. Cardinal Health, Inc. (NYSE:CAH) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is more popular among hedge funds. Our overall hedge fund sentiment score for BMRN is 88.3. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately BMRN wasn't nearly as popular as these 30 stocks and hedge funds that were betting on BMRN were disappointed as the stock returned -10.8% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
