Hedge Funds Are Selling WAVE Life Sciences Ltd. (WVE)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider WAVE Life Sciences Ltd. (NASDAQ:WVE) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

WAVE Life Sciences Ltd. (NASDAQ:WVE) has experienced a decrease in hedge fund interest lately. WAVE Life Sciences Ltd. (NASDAQ:WVE) was in 20 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that WVE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the 21st century investor’s toolkit there are numerous methods stock traders put to use to analyze stocks. Some of the best methods are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass the broader indices by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Wil Harkey Nantahala Capital

Wil Harkey of Nantahala Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to go over the recent hedge fund action encompassing WAVE Life Sciences Ltd. (NASDAQ:WVE).

Do Hedge Funds Think WVE Is A Good Stock To Buy Now?

At the end of March, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in WVE over the last 23 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

The largest stake in WAVE Life Sciences Ltd. (NASDAQ:WVE) was held by RA Capital Management, which reported holding $43.6 million worth of stock at the end of December. It was followed by Deerfield Management with a $19.7 million position. Other investors bullish on the company included Maverick Capital, Nantahala Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to WAVE Life Sciences Ltd. (NASDAQ:WVE), around 0.66% of its 13F portfolio. 0 is also relatively very bullish on the stock, setting aside 0.47 percent of its 13F equity portfolio to WVE.

Since WAVE Life Sciences Ltd. (NASDAQ:WVE) has faced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of funds that slashed their positions entirely heading into Q2. Intriguingly, Joseph Edelman’s Perceptive Advisors cut the biggest investment of all the hedgies followed by Insider Monkey, totaling about $19.7 million in stock, and Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund was right behind this move, as the fund sold off about $3.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q2.

Let’s also examine hedge fund activity in other stocks similar to WAVE Life Sciences Ltd. (NASDAQ:WVE). These stocks are Diana Shipping Inc. (NYSE:DSX), Provident Bancorp, Inc. (NASDAQ:PVBC), SuRo Capital Corp. (NASDAQ:SSSS), Hywin Holdings Ltd. (NASDAQ:HYW), Great Panther Mining Ltd (NYSE:GPL), Navios Maritime Partners L.P. (NYSE:NMM), and Premier Financial Bancorp, Inc. (NASDAQ:PFBI). This group of stocks’ market caps resemble WVE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DSX 13 37706 4
PVBC 5 4867 -2
SSSS 12 31501 1
HYW 1 1960 1
GPL 7 7037 -1
NMM 4 6019 1
PFBI 6 5673 3
Average 6.9 13538 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $114 million in WVE’s case. Diana Shipping Inc. (NYSE:DSX) is the most popular stock in this table. On the other hand Hywin Holdings Ltd. (NASDAQ:HYW) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks WAVE Life Sciences Ltd. (NASDAQ:WVE) is more popular among hedge funds. Our overall hedge fund sentiment score for WVE is 77. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 23.8% in 2021 through July 16th but still managed to beat the market by 7.7 percentage points. Hedge funds were also right about betting on WVE as the stock returned 18.5% since the end of March (through 7/16) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Follow Wave Life Sciences Ltd.

Suggested Articles:

Disclosure: None. This article was originally published at Insider Monkey.