Hedge funds had a very rough 2015, partially because the market performance overall was lousy, and many of them have started 2016 exactly the same way, with some down big already. One reason hedge funds perform badly is they tend to share ideas, which is great if they are good, but if they are bad, like Valeant Pharmaceuticals was last year, it can be disastrous.
A new FactSet research report reviews numerous holdings and metrics at the top 50 hedge funds. We looked through the 50 top holdings to find out which dividend stocks made the cut with the top portfolio managers. We found five that our readers may find interesting.
This is the new top global pharmaceutical stock at Jefferies and it caught an upgrade to Buy Tuesday at Citigroup. Some 17 hedge funds own AbbVie Inc. (NYSE: ABBV) stock, and more could be looking to add it. The global, research-based biopharmaceutical company was formed in 2013 following separation from Abbott Laboratories. Its mission is to develop and market advanced therapies that address some of the world’s most complex and serious diseases.
A major concern is what eventually might happen with anti-inflammatory therapy Humira, which generated $14 billion in sales in fiscal 2015. That $14 billion is the most any drug has recorded during a single year and represents a gigantic part of the AbbVie’s overall earnings. The problem is that biosimilars and generics are itching to enter the market, with Amgen leading the charge, and some Wall Street analysts project that AbbVie may have a difficult time stopping that trend.
Jefferies has become much more positive on the stock and feels that the company’s response to Coherus’s Inter Partes Review (IPR) on key Humira patents looks solid and an IPR denial is a very real possibility.
AbbVie reported mixed fourth-quarter numbers but affirmed guidance, and some on Wall Street were concerned over a new hepatitis C drug from a rival company. The reported earnings were up 27% from the year-earlier quarter and a penny over consensus estimates. Revenue rose 18% but came in below estimates.
AbbVie investors receive a 4.14% dividend. The Thomson/First Call consensus target is $72.25. Shares closed Tuesday at $55.07.
Hedge funds also like this top pharmaceutical stock, as a total of 22 own it now. Pfizer Inc. (NYSE: PFE) has a very strong pipeline, and being the world’s largest drug manufacturer by sales value supports the Wall Street notion that the company can generate higher long-term revenues through the accelerated growth of its new drugs over the next five years.
Also, Pfizer announced recently the details in what would be one of this year’s biggest deals, a $160 billion merger with Allergan. But the Treasury Department said recently that it is working on new rules for corporate tax inversions, which the Pfizer/Allergan deal could be, and that could possibly throw a wrench into the negotiations. Pfizer executives maintain that the government will not scuttle the deal.
Pfizer has announced that it is starting 20 clinical trials this year and more soon after on treatments to conquer cancer, as it also seeks to gain leadership in one of the hottest and most lucrative areas of medicine.
Investors receive a 4.02% dividend. The $39.13 consensus price target compares to Tuesday’s close at $29.96.