In this article we are going to use hedge fund sentiment as a tool and determine whether AbbVie Inc (NYSE:ABBV) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is AbbVie (ABBV) stock a buy or sell? Prominent investors were becoming hopeful. The number of bullish hedge fund bets increased by 1 in recent months. AbbVie Inc (NYSE:ABBV) was in 83 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 89. Our calculations also showed that ABBV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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Jeffrey Tannenbaum of Fir Tree
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Do Hedge Funds Think ABBV Is A Good Stock To Buy Now?
At the end of December, a total of 83 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 1% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ABBV over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Berkshire Hathaway was the largest shareholder of AbbVie Inc (NYSE:ABBV), with a stake worth $2735.9 million reported as of the end of December. Trailing Berkshire Hathaway was Orbis Investment Management, which amassed a stake valued at $877 million. Renaissance Technologies, Two Sigma Advisors, and GQG Partners 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 Healthcare Value Capital allocated the biggest weight to AbbVie Inc (NYSE:ABBV), around 12.63% of its 13F portfolio. Copernicus Capital Management is also relatively very bullish on the stock, setting aside 7.81 percent of its 13F equity portfolio to ABBV.
Now, specific money managers were leading the bulls’ herd. GQG Partners, managed by Rajiv Jain, created the largest position in AbbVie Inc (NYSE:ABBV). GQG Partners had $344.8 million invested in the company at the end of the quarter. Jeremy Green’s Redmile Group also initiated a $148.8 million position during the quarter. The other funds with brand new ABBV positions are Jeffrey Tannenbaum’s Fir Tree, Prashanth Jayaram’s Tri Locum Partners, and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks similar to AbbVie Inc (NYSE:ABBV). We will take a look at Cisco Systems, Inc. (NASDAQ:CSCO), Thermo Fisher Scientific Inc. (NYSE:TMO), Broadcom Inc (NASDAQ:AVGO), Exxon Mobil Corporation (NYSE:XOM), Accenture Plc (NYSE:ACN), QUALCOMM, Incorporated (NASDAQ:QCOM), and T-Mobile US, Inc. (NASDAQ:TMUS). All of these stocks’ market caps are similar to ABBV’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSCO,60,4974309,1 TMO,89,5470797,9 AVGO,59,3342445,0 XOM,63,2208617,11 ACN,50,2133706,4 QCOM,85,2727547,-2 TMUS,103,9117019,9 Average,72.7,4282063,4.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 72.7 hedge funds with bullish positions and the average amount invested in these stocks was $4282 million. That figure was $6965 million in ABBV’s case. T-Mobile US, Inc. (NASDAQ:TMUS) is the most popular stock in this table. On the other hand Accenture Plc (NYSE:ACN) is the least popular one with only 50 bullish hedge fund positions. AbbVie Inc (NYSE:ABBV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ABBV is 65.1. 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 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 7% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately ABBV wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on ABBV were disappointed as the stock returned 2.2% since the end of December (through 3/12) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.