It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data, though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.
Spark Therapeutics Inc (NASDAQ:ONCE) shareholders have witnessed a decrease in hedge fund interest of late. ONCE was in 11 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with ONCE holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Globant SA (NYSE:GLOB) and CSG Systems International, Inc. (NASDAQ:CSGS) to gather more data points.
In today’s marketplace there are plenty of gauges investors use to analyze their holdings. Two of the less known gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top investment managers can trounce the market by a solid margin (see the details here).
Keeping this in mind, let’s take a glance at the recent action regarding Spark Therapeutics Inc (NASDAQ:ONCE).
Hedge fund activity in Spark Therapeutics Inc (NASDAQ:ONCE)
At the Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 35% over the quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the most valuable position in Spark Therapeutics Inc (NASDAQ:ONCE), worth close to $52.7 million, corresponding to 0.5% of its total 13F portfolio. The second most bullish fund manager is Rock Springs Capital Management, led by Kris Jenner, Gordon Bussard, Graham McPhail, holding a $20.9 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass Bain Capital’s Brookside Capital, James Dondero’s Highland Capital Management, and Hal Mintz’s Sabby Capital.
Due to the fact that Spark Therapeutics Inc (NASDAQ:ONCE) has experienced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who were dropping their positions entirely in the third quarter. At the top of the heap, James E. Flynn’s Deerfield Management dropped the biggest stake of the 700 funds monitored by Insider Monkey, worth an estimated $38 million in stock, and Samuel Isaly’s OrbiMed Advisors was right behind this move, as the fund said goodbye to about $10 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 6 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Spark Therapeutics Inc (NASDAQ:ONCE). We will take a look at Globant SA (NYSE:GLOB), CSG Systems International, Inc. (NASDAQ:CSGS), and FelCor Lodging Trust Incorporated (NYSE:FCH). All of these stocks’ market caps are similar to 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 17 hedge funds with bullish 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 OMG might be a better candidate to consider a long position.