Here is What Hedge Funds Think About Editas Medicine, Inc. (EDIT)

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of September 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Editas Medicine, Inc. (NASDAQ:EDIT).

Is Editas Medicine, Inc. (NASDAQ:EDIT) going to take off soon? The smart money was selling. The number of long hedge fund bets decreased by 1 lately. Editas Medicine, Inc. (NASDAQ:EDIT) was in 22 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that EDIT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 23 hedge funds in our database with EDIT positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to go over the key hedge fund action encompassing Editas Medicine, Inc. (NASDAQ:EDIT).

Kamran Moghtaderi of Eversept Partners

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

At the end of September, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EDIT over the last 25 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, ARK Investment Management, managed by Catherine D. Wood, holds the number one position in Editas Medicine, Inc. (NASDAQ:EDIT). ARK Investment Management has a $258.7 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $30.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions encompass John Overdeck and David Siegel’s Two Sigma Advisors, and Jay Chen’s Himension Capital. In terms of the portfolio weights assigned to each position Himension Capital allocated the biggest weight to Editas Medicine, Inc. (NASDAQ:EDIT), around 0.73% of its 13F portfolio. ARK Investment Management is also relatively very bullish on the stock, dishing out 0.62 percent of its 13F equity portfolio to EDIT.

Because Editas Medicine, Inc. (NASDAQ:EDIT) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that decided to sell off their positions entirely in the third quarter. It’s worth mentioning that Renaissance Technologies sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising about $7.9 million in stock. Bryan Hinmon’s fund, Motley Fool Asset Management, also dumped its stock, about $3.1 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Editas Medicine, Inc. (NASDAQ:EDIT). We will take a look at Accolade, Inc. (NASDAQ:ACCD), LendingClub Corp (NYSE:LC), Commscope Holding Company Inc (NASDAQ:COMM), Cardlytics, Inc. (NASDAQ:CDLX), ACV Auctions Inc. (NASDAQ:ACVA), Retail Properties of America Inc (NYSE:RPAI), and Cannae Holdings, Inc. (NYSE:CNNE). All of these stocks’ market caps are similar to EDIT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACCD 28 482430 4
LC 25 437384 2
COMM 37 681641 1
CDLX 23 830080 -6
ACVA 22 230648 0
RPAI 11 61780 -5
CNNE 35 446118 1
Average 25.9 452869 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $453 million. That figure was $336 million in EDIT’s case. Commscope Holding Company Inc (NASDAQ:COMM) is the most popular stock in this table. On the other hand Retail Properties of America Inc (NYSE:RPAI) is the least popular one with only 11 bullish hedge fund positions. Editas Medicine, Inc. (NASDAQ:EDIT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EDIT is 52.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately EDIT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); EDIT investors were disappointed as the stock returned -35.4% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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