Someone’s Selling Pfizer Inc. (PFE) Shares, Should You?
Pfizer Inc. (NYSE:PFE) is up 13.5% in 2013, but one sect of the market has sold off some shares of late. Who is it?
Now, according to many traders, hedge funds are seen as delayed, outdated investment tools of an era lost to time. Although there are more than 8,000 hedge funds trading in present day, this site focuses on the moguls of this club, about 525 funds. It is widely held that this group oversees most of the smart money's total capital, and by keeping an eye on their highest performing stock picks, we've unearthed a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as crucial, optimistic insider trading activity is another way to look at the marketplace. As the old adage goes: there are lots of motivations for a bullish insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the market-beating potential of this tactic if "monkeys" understand what to do (learn more here).
What's more, it's important to study the latest info surrounding Pfizer Inc. (NYSE:PFE).
What does the smart money think about Pfizer Inc. (NYSE:PFE)?
In preparation for the third quarter, a total of 75 of the hedge funds we track were bullish in this stock, a change of -7% from one quarter earlier. With the smart money's capital changing hands, there exists a few key hedge fund managers who were increasing their stakes meaningfully.
According to our 13F database, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Pfizer Inc. (NYSE:PFE). Fisher Asset Management has a $861 million position in the stock, comprising 2.2% of its 13F portfolio. On Fisher Asset Management's heels is Pentwater Capital Management, managed by Matthew Halbower, which held a $765.1 million position; 16.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include D. E. Shaw's D E Shaw, Cliff Asness's AQR Capital Management and Christopher Medlock James's Partner Fund Management.
Since Pfizer Inc. (NYSE:PFE) has faced a fall in interest from the entirety of the hedge funds we track, logic holds that there were a few hedgies who were dropping their positions entirely heading into Q2. Interestingly, Rob Citrone's Discovery Capital Management sold off the biggest investment of the 450+ funds we key on, totaling about $508.1 million in stock. Stanley Druckenmiller's fund, Duquesne Capital, also said goodbye to its stock, about $98.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds heading into Q2.
How are insiders trading Pfizer Inc. (NYSE:PFE)?
Bullish insider trading is particularly usable when the company in question has experienced transactions within the past six months. Over the latest half-year time period, Pfizer Inc. (NYSE:PFE) has experienced 1 unique insiders purchasing, and 13 insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to Pfizer Inc. (NYSE:PFE). These stocks are GlaxoSmithKline plc (ADR) (NYSE:GSK), Merck & Co., Inc. (NYSE:MRK), Sanofi SA (ADR) (NYSE:SNY), Johnson & Johnson (NYSE:JNJ), and Novartis AG (ADR) (NYSE:NVS). All of these stocks are in the drug manufacturers - major industry and their market caps resemble PFE's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
GlaxoSmithKline plc (ADR) (NYSE:GSK)
Merck & Co., Inc. (NYSE:MRK)
Sanofi SA (ADR) (NYSE:SNY)
Johnson & Johnson (NYSE:JNJ)
Novartis AG (ADR) (NYSE:NVS)
Using the returns shown by our research, average investors should always watch hedge fund and insider trading activity, and Pfizer Inc. (NYSE:PFE) shareholders fit into this picture quite nicely.