It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Spark Therapeutics Inc (NASDAQ:ONCE).
Spark Therapeutics Inc (NASDAQ:ONCE) was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. ONCE investors should be aware of a decrease in activity from the world’s largest hedge funds recently. There were 16 hedge funds in our database with ONCE holdings at the end of the previous quarter. At the end of this article we will also compare ONCE to other stocks including Brink’S Co (NYSE:BCO), Financial Engines Inc (NASDAQ:FNGN), and Pretium Resources Inc (NYSE:PVG) to get a better sense of its popularity.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
How have hedgies been trading Spark Therapeutics Inc (NASDAQ:ONCE)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 19% drop from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards ONCE over the last 5 quarters, which included a surge during the first-half of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Baker Bros. Advisors, led by Julian Baker and Felix Baker, holds the largest position in Spark Therapeutics Inc (NASDAQ:ONCE). Baker Bros. Advisors has a $79.2 million position in the stock. On Baker Bros. Advisors’ heels is Kris Jenner, Gordon Bussard, and Graham McPhail of Rock Springs Capital Management, with a $37.5 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish comprise James E. Flynn’s Deerfield Management, Bain Capital’s Brookside Capital, and Dmitry Balyasny’s Balyasny Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cut their entire stakes in the stock during the third quarter. Interestingly, Israel Englander’s Millennium Management cut the largest investment of the 700 funds tracked by Insider Monkey, valued at close to $15.9 million in stock, and Michael Hintze’s CQS Cayman LP was right behind this move, as the fund sold off about $6.9 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Spark Therapeutics Inc (NASDAQ:ONCE) but similarly valued. We will take a look at Brink’S Co (NYSE:BCO), Financial Engines Inc (NASDAQ:FNGN), Pretium Resources Inc (NYSE:PVG), and DiamondRock Hospitality Company (NYSE:DRH). This group of stocks’ market caps resemble ONCE’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $195 million in ONCE’s case. Brink’S Co (NYSE:BCO) is the most popular stock in this table. On the other hand Pretium Resources Inc (NYSE:PVG) is the least popular one with only 12 bullish hedge fund positions. Spark Therapeutics Inc (NASDAQ:ONCE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BCO might be a better candidate to consider taking a long position in.