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Can Sangamo Biosciences, Inc. (SGMO) Win the Battle Against its Market Cap Peers?

The 700+ hedge funds and money managers tracked by Insider Monkey have compiled and submitted their 13F filings for the third quarter, which unveiled their equity positions as of September 30. We went through these filings and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Sangamo Biosciences, Inc. (NASDAQ:SGMO).

Is Sangamo Biosciences, Inc. (NASDAQ:SGMO) a buy right now? The smart money is becoming less confident. The number of bullish hedge fund bets fell by 3 in recent months. SGMO was in 19 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with SGMO holdings at the end of the previous quarter. At the end of this article we will also compare SGMO to other stocks including Donegal Group Inc (NASDAQ:DGICA), Cascade Bancorp (NASDAQ:CACB), and FormFactor, Inc. (NASDAQ:FORM) to get a better sense of its popularity.

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In the 21st century investor’s toolkit there are several gauges investors put to use to value stocks. Some of the most innovative gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outclass the S&P 500 by a solid amount (see the details here).

With all of this in mind, we’re going to take a look at the latest action encompassing Sangamo Biosciences, Inc. (NASDAQ:SGMO).

What does the smart money think about Sangamo Biosciences, Inc. (NASDAQ:SGMO)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 14% fall from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or had already accumulated large positions).

According to Insider Monkey’s hedge fund database, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the number one position in Sangamo Biosciences, Inc. (NASDAQ:SGMO). Baker Bros. Advisors has a $21.2 million position in the stock, comprising 0.2% of its 13F portfolio. On Baker Bros. Advisors’ heels is Millennium Management, led by Israel Englander, holding a $13.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish encompass Peter Kolchinsky’s RA Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Clifford Fox’s Columbus Circle Investors.

Judging by the fact that Sangamo Biosciences, Inc. (NASDAQ:SGMO) has witnessed bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds who were dropping their positions entirely by the end of the third quarter. Interestingly, RA Capital Management said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling about $66.5 million in stock, and Joseph Edelman’s Perceptive Advisors was right behind this move, as the fund dropped about $8.9 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Sangamo Biosciences, Inc. (NASDAQ:SGMO). We will take a look at Donegal Group Inc (NASDAQ:DGICA), Cascade Bancorp (NASDAQ:CACB), FormFactor, Inc. (NASDAQ:FORM), and Rudolph Technologies Inc (NYSE:RTEC). This group of stocks’ market values resemble SGMO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DGICA 6 5583 1
CACB 6 83032 -1
FORM 18 34224 1
RTEC 19 46402 8

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $66 million in SGMO’s case. Rudolph Technologies Inc (NYSE:RTEC) is the most popular stock in this table. On the other hand Donegal Group Inc (NASDAQ:DGICA) is the least popular one with only 6 bullish hedge fund positions. Sangamo Biosciences, Inc. (NASDAQ:SGMO) is tied with RTEC as the most popular stock in this group and has more money invested in it. This is a positive signal, and both RTEC and SGMO might be good candidates to consider long positions in.

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