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Four of the Biggest Movers on a Volatile Friday Morning

Market fear just isn’t going away. With S&P futures down by 2% in the pre-market and crude prices breaking below $30 per barrel, Friday looks to be another volatile day. Among today’s big early movers are Edwards Lifesciences Corp (NYSE:EW), Sarepta Therapeutics Inc (NASDAQ:SRPT), Wynn Resorts, Limited (NASDAQ:WYNN), and Intel Corporation (NASDAQ:INTC). Let’s take a closer look at the catalysts causing these stocks to move and examine relevant hedge fund sentiment toward these equities.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

Edwards Lifesciences Corp (NYSE:EW), a life sciences company focused on technologies that treat structural heart disease and critically ill patients, is trending after the company disclosed that it has received FDA approval for an expanded indication study of its SAPIEN 3 valve. The expanded indication study, which will be a non-inferiority study with a one-year composite endpoint that includes stroke, death, and rehospitalization, will include 1,300 patients at up to almost 50 sites. Elderly patients with severe, symptomatic aortic stenosis who have a low risk of death if they were to undergo surgical aortic valve replacement, will be enrolled in the trial. Corporate Vice President Larry L. Wood said:

“If this trial is successful, it will allow heart teams to choose a treatment approach that is best suited to every patient’s individual need. We are pleased to begin this important study of the SAPIEN 3 transcatheter valve to evaluate its safety and effectiveness in a broader group of elderly patients suffering from this deadly disease.”

If the study is successful, demand for SAPIEN 3 will likely rise. Shares are now down by 2% in morning trading. Hedge fund sentiment around Edwards Lifesciences Corp (NYSE:EW) has been stable. The number of elite funds long the stock remained unchanged quarter-over-quarter during the third quarter.

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Sarepta Therapeutics Inc (NASDAQ:SRPT) shares have been cut by more than half in morning trading after the FDA released its briefing docs for Sarepta’s DMD drug, Eteplirsen. In the briefing, the FDA said the following:

“Based on the data submitted by the applicant, considerable doubt remains about how much, or perhaps even whether, dystrophin levels were increased by eteplirsen. The degree of uncertainty about the dystrophin data hinders discussion of its use as surrogate endpoint for eteplirsen. However, to the degree that the dystrophin data may be interpretable, the amount and distribution of dystrophin in treated patients appears to be within the range typically associated with DMD, not BMD. Data suggesting that higher levels of dystrophin were produced by eteplirsen appear unreliable.”

Because of the ‘considerable doubt’ language, traders took the briefing docs as a sign that the probability of FDA approval of Eteplirsen is lower than expected. According to our data, hedge funds were bullish on Sarepta Therapeutics Inc (NASDAQ:SRPT) in the third quarter. A total of 20 funds reported stakes worth $306.66 million (representing 23.10% of the float) as of the end of September, versus 14 funds with stakes valued at $231.36 million as of the end of June.

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On the next page we examine why Wynn Resorts Limited and Intel Corporation are making big moves in opposite directions this morning.

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