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May’s top Blends: Einhorn rises, Corona falls
The top performing Blends in May and the latest YTD performance.
May’s Star Performer: Einhorn Blend
David Einhorn led the way in May as global stocks continued their bounce back. The hedge fund boss – founder of Greenlight Capital – enjoyed a strong month as holdings like General Motors and Green Brick Partners rose along with other holdings such as AerCap and Chemours. The Einhorn Blend rose 15% in May but remains down 23% for the year.
The second-best performing Blend in May was the Cannabis Blend, which rose almost 14%. Earlier in the month it had been down but recovered strongly in the last two weeks. The blend is flat for the year, at -0.11%. Tilray (40% of the blend by weighting) and Canopy Growth (33%) both rallied in May but remain significantly off the 2018 peak.
As risk appetite improved across the month of May, some of the better performers lagged. Notably, the Corona Blend, which had been doing well, was the only basket to record a fall over the month of May.
The Social Media Blend rose over 5% in May despite the sector attracting the ire of Donald Trump. Twitter, which makes up 10% of the index, came in for the most brutal attack by the president but shares in Facebook (45% weighted) also slipped in the final week of May.
The worst performer this year is the UK High Street Blend, which is hardly surprising given the structural shift in retail coming up against the lockdown measures enacted by the British government which has slashed footfall.
Blends 2020 Leader Board
|Trade War Winners||2.21%|
|Dogs of the Dow||-11.90%|
|Trade War Losers||-14.36%|
|Oil and Petroleum||-32.32%|
Trade the race for a COVID-19 vaccine with our new Corona Blend
Scientists across the globe are racing to pull off an incredible feat – reducing the time it takes to develop a vaccine from years to months.
Our new Corona Blend allows you to trade a basket of the top stocks directly linked to the search for a COVID-19 vaccine. There are currently over 70 potential vaccines in development – the Corona Blend focusses on seven companies who are well positioned to lead the race.
Johnson & Johnson (JNJ)
Pharmaceutical giant Johnson & Johnson is facing stiff competition across the globe, but the company has a distinct advantage: it has two backup vaccine candidates in case its primary candidate encounters unexpected setbacks during trials. JNJ also has immense production capabilities – the company reckons it could produce 900 million doses by April 2021.
Our Analyst Recommendations tool gives Johnson & Johnson a 24% upside, but the consensus rating is a ‘Hold’. Hedge funds sold almost 100 million shares in the last quarter, while company insiders sold nearly 3.5 million in the last three months.
Pfizer, working in conjunction with BioNTech, has just received clearance to start running trials of its vaccine candidate in Germany. If all goes to plan the two companies expect to be able to produce millions of vaccines by the end of the year.
Pfizer is currently trading below the year’s opening levels, but analysts and hedge funds are bullish on the stock. PFE has a 17% upside and hedge funds bought 65 million new shares in the previous quarter.
Gilead Sciences (GILD)
Gilead has seen some huge gains on the back of news surrounding its ‘remdesivir’ antiviral drug, but the stock remains highly volatile. Overall our stock sentiment tools are showing positive signals – company insiders and hedge funds have been snapping up the stock, although GILD is already trading around the consensus price target from Wall Street analysts.
Regeneron Pharma (REGN)
REGN is up nearly 50% this year, with recent gains coming on the back of hopes for a ‘cocktail’ of antibodies that may help protect health workers from COVID-19 until a vaccine is created. Many companies are attempting to produce such an elixir, but Regeneron is well-positioned to lead the search.
Hedge funds added a total of 1 million REGN shares to their portfolios in the past quarter. Sentiment amongst top money managers is positive, while analysts rate the stock a ‘Buy’ and see a 10% upside.
Sanofi (SNY – NYSE)
Sanofi has partnered with GlaxoSmithKline to accelerate production of its vaccine, and the two companies are hoping to start clinical trials in the latter half of 2020. According to Sanofi CEO Paul Hudson, the company will be able to produce 600 million doses of the vaccine in 2021 if everything goes to plan.
Moderna Inc (MRNA)
Moderna stock jumped 10% on April 20th as investors began piling into pharmaceutical companies. The company’s mRNA-1273 vaccine candidate will receive $483 million in funding for Phase II and III clinical trials from the US Biomedical Advanced Research and Development Authority (BARDA).
MRNA has a ‘Strong Buy’ rating according to our Analyst Recommendations tool, although the average price target is 19% below the current trading price.
Vir Biotechnology (VIR)
Vir recently announced that it was joining forces with GlaxoSmithKline to combat COVID-19. GSK stated that it will make a $250 million equity investment in Vir, and that some ‘promising antibody candidates ‘ will be ‘accelerated into phase 2 clinical trials within the next three to five months’.
Vir Biotechnology currently has a ‘Neutral’ rating, according to our Analyst Recommendations tool. The average target price is $31, barely above the current price. Estimates range from $20 up to $41.
Trade the vaccine trials with the Corona Blend
Will one of these companies be the one to develop a working coronavirus vaccine, or will an outsider beat them to it? Trade the Corona Blend long or short to capture the performance of these top pharma stocks.
Bridgewater misses the mark, but how do other funds fair?
Pure Alpha, Bridgewater Associates’s flagship fund, fell 4.9% in the first half of 2019 after being caught off-guard by a rebound in bonds and equities.
The drop of nearly 5% in the first six months of the year is one of the worst performances for investment legend Ray Dalio’s $150bn hedge fund in the past 20 years, the Financial Times reported. The drop follows a strong 2018 performance and, while Bridgewater did not comment on the loss, it is thought the fund approached 2019 expecting more turbulence and were surprised by a market recovery.
By comparison, the average macro hedge fund gained 5.2 per cent in the same period, while the FTSE All-World equity index rose 15% in the six months to June.
While Bridgewater’s fund has suffered a drop this year, it has suffered similar losses in the first half before and managed to turn things around by the end of the year.
But what about other top fund managers? Did they anticipate the rebound that caught Dalio offguard? Our Guru Blends are carefully-assembled baskets of shares that mirror the portfolios of top investors in a single CFD – take a look below to see how they fared in the first six months of 2019.
Warren Buffett is one of the most successful fund managers and is widely known as the Oracle of Omaha. He is the CEO of Berkshire Hathaway and, despite being considered technology adverse, his largest position is in Apple. He is known for his methodical, value-based style of investing.
Buffett favours quality businesses that have good valuations and potential for large growth.
In the six months to June 2019, the performance of our Warren Buffett Blend was up 51.77%, with particularly good performances in February and March this year.
An activist investor, Ackman’s style is very different to Buffett’s. He prefers to own large holdings in a small number of companies in order to get enough leverage to push through changes within the business. Through these changes, he seeks to release value for shareholders.
His largest holdings are in Restaurant Brands International, Lowe’s and Chipotle.
In the six months to June 2019 our Ackman Blend – which mirrors his portfolio – has had a staggering performance. It is up 95.89%, having had a particularly good February and March.
Like Ackman, Icahn is an activist investor. He has said in the past that: “My investment philosophy, generally, with exceptions, is to buy something when no one wants it.”
More particularly, as a contrarian investor, he buys unpopular stocks and then uses his position as a major shareholder to force through changes that deliver more value, often replacing the whole board of directors.
His fund has large positions in CVR Energy, Herbalife Nutrition and Cheniere Energy.
This year to date, the Icahn Blend is up 21.12% and has managed to overcome poor performances in February, March and May.
Known as a maverick hedge fund manager, Soros is a short-term speculator. An investment of $1000 with him in 1969 would be worth over $4 million today.
Soros makes large one-way bets on the movements of currency, commodities, bonds and derivatives, speculating on whether they will rise or fall. He is widely remembered as the man who broke the Bank of England, in what became known as Black Wednesday.
In the six months to June 2019, our Soros Blend is up 31.99%. This is a new Blend for MARKETS.COM but it mirrors Soros’ existing portfolio.
Brad Gerstner is the founder and CEO of Altimeter Capital Management, a hedge fund that focuses on technology firms.
His portfolio is dominated by United Continental and Facebook, but also features other big names like Microsoft, Salesforce.com and Alibaba.
In the six months to June 2019, our Gerstner Blend was up 1.33%. The Blend is recovering from big drops in February and March but bounced back in June.
A long-short investor, David Einhorn’s strategy is to take long positions on stock that is expected to appreciate and short positions on stock expected to decline. The fund bases these positions on whether an asset is over or undervalued. Such is his influence, that the Einhorn Effect is a term used to describe a sharp fall in an asset that occurs after he publicly shorts it.
The fund has large stakes in General Motors, Brighthouse Financial and Green Brick Partners.
In the first six months of the year, our Einhorn Blend dropped 26.31%. As with other Blends, it saw significant drops in February and March.
Our Guru Blends allow you to mirror the performance of some of the savviest and most experienced hedge fund managers in the world with a single instrument. Find out more about trading our Guru Blends.