In this article you are going to find out whether hedge funds think Incyte Corporation (NASDAQ:INCY) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Incyte Corporation (NASDAQ:INCY) a healthy stock for your portfolio? The smart money was in a bullish mood. The number of bullish hedge fund positions improved by 3 in recent months. Incyte Corporation (NASDAQ:INCY) was in 37 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 53. Our calculations also showed that INCY isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 34 hedge funds in our database with INCY positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let's analyze the fresh hedge fund action regarding Incyte Corporation (NASDAQ:INCY).
Cathie Wood of ARK Investment Management
Do Hedge Funds Think INCY Is A Good Stock To Buy Now?
At the end of September, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 35 hedge funds with a bullish position in INCY a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Baker Bros. Advisors was the largest shareholder of Incyte Corporation (NASDAQ:INCY), with a stake worth $2202.5 million reported as of the end of September. Trailing Baker Bros. Advisors was Renaissance Technologies, which amassed a stake valued at $303.4 million. ARK Investment Management, Armistice Capital, 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 Baker Bros. Advisors allocated the biggest weight to Incyte Corporation (NASDAQ:INCY), around 9.67% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, setting aside 2.76 percent of its 13F equity portfolio to INCY.
As one would reasonably expect, specific money managers have jumped into Incyte Corporation (NASDAQ:INCY) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the largest position in Incyte Corporation (NASDAQ:INCY). Balyasny Asset Management had $52.3 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $31 million position during the quarter. The other funds with new positions in the stock are Arthur B Cohen and Joseph Healey's Healthcor Management LP, Jinghua Yan's TwinBeech Capital, and David M. Knott's Dorset Management.
Let's also examine hedge fund activity in other stocks similar to Incyte Corporation (NASDAQ:INCY). These stocks are Arch Capital Group Ltd. (NASDAQ:ACGL), Smith & Nephew plc (NYSE:SNN), Avalara, Inc. (NYSE:AVLR), Elanco Animal Health Incorporated (NYSE:ELAN), Check Point Software Technologies Ltd. (NASDAQ:CHKP), Doximity Inc. (NYSE:DOCS), and Franklin Resources, Inc. (NYSE:BEN). This group of stocks' market valuations are similar to INCY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACGL,31,1214570,9 SNN,19,106245,6 AVLR,24,1070703,-5 ELAN,32,1850148,-10 CHKP,30,621231,1 DOCS,19,554548,19 BEN,28,359424,-2 Average,26.1,825267,2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $825 million. That figure was $3295 million in INCY's case. Elanco Animal Health Incorporated (NYSE:ELAN) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Incyte Corporation (NASDAQ:INCY) is more popular among hedge funds. Our overall hedge fund sentiment score for INCY is 78.9. 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 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately INCY wasn't nearly as popular as these 5 stocks and hedge funds that were betting on INCY were disappointed as the stock returned -1.5% since the end of the third quarter (through 11/30) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.