Actavis Plc (ACT) Proved Hedge Funds Right

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Actavis Inc (NYSE:ACT) was in 118 hedge funds’ portfolio at the end of the third quarter of 2014. It was one of the 10 most popular stocks among hedge funds, according to data compiled by hedge fund tracking site Insider Monkey. Actavis Plc (NYSE:ACT) has also experienced an increase in hedge fund interest during the third quarter. There were 113 hedge funds with ACT holdings at the end of the previous quarter. The stock returned 11.4% since the end of the third quarter, vs. a 4.2% gain for the S&P 500 ETF (SPY).

The research by Insider Monkey revealed that hedge funds’ top stock picks outperformed the market historically. The 15 most popular small-cap stocks among hedge funds did even better, outperforming the market by 18 percentage points per year in their back tests. They have been sharing their stock picks in real-time since the end of August 2012 and their picks returned 125% through the end of December 2014, vs. 53.3% gain for SPY (see the details here).

How have hedgies been trading Actavis Inc (NYSE:ACT)?

At the end of the third quarter, a total of 118 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully.

Daniel S. Och’s OZ Management had the most valuable position in Actavis Inc (NYSE:ACT), worth close to $1.17 billion, amounting to 3.4% of its total 13F portfolio. Coming in second is Third Point, led by Dan Loeb, holding a $693.7 million position; 8% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Andreas Halvorsen’s Viking Global, Barry Rosenstein’s JANA Partners and Stephen Mandel’s Lone Pine Capital.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Glenview Capital, managed by Larry Robbins, initiated the biggest position in Actavis Inc (NYSE:ACT). Glenview Capital had 414.5 million invested in the company at the end of the quarter. James Dinan’s York Capital Management also initiated a $301.8 million position during the quarter. The other funds with brand new ACT positions are Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Nehal Chopra’s Ratan Capital Group, and Scott Ferguson’s Sachem Head Capital.

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