Is Allergan, Inc. (NYSE:AGN) the right pick for your portfolio? Prominent investors are getting less optimistic. The number of bullish hedge fund bets went down by 8 recently. However, the news isn’t all bad. Allergan, Inc. (NYSE:AGN) is still one of the most popular stocks among hedge funds. Hedge fund managers like Jeffrey Altman, Mark Kingdon, and Tom Sandell initiated brand new positions in the stock during the third quarter. Should you pay attention to hedge fund moves in Allergan?
The researchers at hedge fund tracking website Insider Monkey has identified various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in their back tests. Their research also showed that the most popular stocks among hedge funds outperform the market on average.
Keeping this in mind, we’re going to take a look at the recent action encompassing Allergan, Inc. (NYSE:AGN).
What have hedge funds been doing with Allergan, Inc. (NYSE:AGN)?
At Q3’s end, a total of 100 of the hedge funds tracked by Insider Monkey were long in this stock, a change of -7% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially.
According to hedge fund intelligence website Insider Monkey, Pershing Square, managed by Bill Ackman, holds the largest position in Allergan, Inc. (NYSE:AGN). Pershing Square has a $5.1459 billion position in the stock, comprising 38.3% of its 13F portfolio. The second largest stake is held by Paulson & Co, managed by John Paulson, which held a $958.2 million position; the fund has 4% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Daniel S. Och’s OZ Management, Matthew Halbower’s Pentwater Capital Management and Andreas Halvorsen’s Viking Global.
Because Allergan, Inc. (NYSE:AGN) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of funds that decided to sell off their entire stakes in third quarter. At the top of the heap, Richard Perry’s Perry Capital said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, totaling about $282.2 million in stock, and Michael A. Price and Amos Meron of Empyrean Capital Partners was right behind this move, as the fund dumped about $84.6 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 8 funds in third quarter.