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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Regeneron Pharmaceuticals Inc (NASDAQ:REGN) and determine whether the smart money was really smart about this stock.
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) shareholders have witnessed an increase in hedge fund interest recently. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) was in 49 hedge funds' portfolios at the end of June. This is the new all time high for this statistics. Our calculations also showed that REGN isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
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 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Arthur B Cohen and Joseph Healey of Healthcor Management LP
At Insider Monkey we scour multiple sources to uncover the next great investment idea. 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 precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we're going to take a gander at the recent hedge fund action surrounding Regeneron Pharmaceuticals Inc (NASDAQ:REGN).
How are hedge funds trading Regeneron Pharmaceuticals Inc (NASDAQ:REGN)?
At Q2's end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the first quarter of 2020. By comparison, 37 hedge funds held shares or bullish call options in REGN a year ago. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Regeneron Pharmaceuticals Inc (NASDAQ:REGN), with a stake worth $555.1 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $222.8 million. Citadel Investment Group, PEAK6 Capital Management, and Polar Capital 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 Voleon Capital allocated the biggest weight to Regeneron Pharmaceuticals Inc (NASDAQ:REGN), around 10.85% of its 13F portfolio. Bridger Management is also relatively very bullish on the stock, designating 3.24 percent of its 13F equity portfolio to REGN.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Regeneron Pharmaceuticals Inc (NASDAQ:REGN) headfirst. Holocene Advisors, managed by Brandon Haley, established the largest position in Regeneron Pharmaceuticals Inc (NASDAQ:REGN). Holocene Advisors had $76.7 million invested in the company at the end of the quarter. Arthur B Cohen and Joseph Healey's Healthcor Management LP also initiated a $35.3 million position during the quarter. The other funds with brand new REGN positions are Steve Cohen's Point72 Asset Management, Anand Parekh's Alyeska Investment Group, and Michael Kharitonov and Jon David McAuliffe's Voleon Capital.
Let's now review hedge fund activity in other stocks similar to Regeneron Pharmaceuticals Inc (NASDAQ:REGN). These stocks are Canadian National Railway Company (NYSE:CNI), Colgate-Palmolive Company (NYSE:CL), China Petroleum & Chemical Corp (NYSE:SNP), Equinix Inc (REIT) (NASDAQ:EQIX), Advanced Micro Devices, Inc. (NASDAQ:AMD), Enbridge Inc (NYSE:ENB), and The TJX Companies, Inc. (NYSE:TJX). This group of stocks' market valuations resemble REGN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNI,28,2050472,2 CL,50,1699344,-3 SNP,10,168521,1 EQIX,49,2314147,-6 AMD,51,2569197,-11 ENB,28,379932,3 TJX,72,2347508,3 Average,41.1,1647017,-1.6 [/table]
As you can see these stocks had an average of 41.1 hedge funds with bullish positions and the average amount invested in these stocks was $1647 million. That figure was $1604 million in REGN's case. The TJX Companies, Inc. (NYSE:TJX) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 10 bullish hedge fund positions. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for REGN is 69.7. 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 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 gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately REGN wasn't nearly as popular as these 10 stocks and hedge funds that were betting on REGN were disappointed as the stock returned -0.6% 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 many of these stocks already outperformed the market so far this year.
