The latest round of 13F filings from the largest U.S. hedge funds is in, and analysis of them reveals some very interesting trends regarding the funds’ investments. For example, they reveal that Valeant Pharmaceuticals was the most polarizing stock during the first quarter.
What to do with Valeant?
Wall Street apparently has multiple personality disorder when it comes to the drug maker’s stock. Valeant was both the top buy and the top sell at hedge funds during the first quarter. This interesting phenomenon has not happened before in the last eight quarters in which the researchers at S&P Capital IQ have analyzed the 13F filings of the biggest hedge funds in the U.S.
According to the firm’s analysis, Valeant Pharmaceuticals recorded $3.7 billion worth of purchases among the top 10 hedge funds during the first quarter—the most of any other company. The drug maker also saw $1.4 billion in sells, which again was the top spot.
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As you can see from the following graph, stocks with some activist intervention over the last year or so made two of the top spots in purchasing and three of the top five spots in selling. Actavis was in second place in terms of purchases, while Dollar General was in the second place in terms of sells. (All graphs / charts in this article are courtesy S&P Capital IQ or FactSet as indicated.)
Unsurprisingly, the firm found that Bill Ackman’s Pershing Square Capital Management was the top purchaser of Valeant shares, snapping up 19 million shares of the company during the first quarter. Lone Pine Capital and Viking Global Investors were the top sellers of Valeant shares.
A broader view of hedge funds
When expanding the analysis to the top 50 hedge funds, Valeant Pharmaceuticals was again one of the top purchases, although it landed in second place in FactSet’s analysis. Interestingly, Qualcomm was in the top spot with about $2.1 billion in aggregate purchases among the top 50 hedge funds during the quarter. The chip maker didn’t even make the top five list on S&P Capital IQ’s list. Qualcomm was also the 16th biggest position in the aggregate portfolio of the funds.
Valeant was in second place with about $1.9 billion in purchases among the top 50 funds, according to FactSet’s analysis. FactSet also found that Actavis was the most widely held among the top 50 hedge funds as of the end of the first quarter, with 28 funds holding a position. Actavis was the third biggest holding in the aggregate portfolio.
Here are the top 10 holdings among the top 50 hedge funds according to FactSet:
In terms of the top sells among the top 50 hedge funds, FactSet reported that Actavis was actually the biggest aggregate sale with about $3.2 billion. In second place was Medtronic with about $3 billion in sales.
Once again, FactSet found that Apple was the top holding. The top new position was Aena SA.
Biggest position changes for hedge funds
S&P Capital IQ also gave the top five increases and declines in existing positions, with Actavis topping the list in increases and Valeant again landing another top spot, this time in the top new positions, according to S&P Capital IQ:
Valeant won the top spot yet again in the top five decreases in existing positions, while Alibaba was in the top five sold-out positions, according to the firm’s analysis of 13F filings:
Top changes according to FactSet
FactSet’s analysis came up different from that of S&P Capital IQ in this area as well. In fact, the results were quite a bit different, as shown by the following chart:
We are awaiting further clarification from S&P Capital IQ regarding their methodology for calculating the top holdings and how it differs from that used by FactSet. We will update this article when we receive it.