After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Editas Medicine, Inc. (NASDAQ:EDIT).
Is EDIT a good stock to buy now? Editas Medicine, Inc. (NASDAQ:EDIT) investors should be aware of a decrease in hedge fund sentiment recently. Editas Medicine, Inc. (NASDAQ:EDIT) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that EDIT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let’s view the recent hedge fund action surrounding Editas Medicine, Inc. (NASDAQ:EDIT).
Do Hedge Funds Think EDIT Is A Good Stock To Buy Now?
At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in EDIT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in Editas Medicine, Inc. (NASDAQ:EDIT), which was worth $28 million at the end of the third quarter. On the second spot was Deerfield Management which amassed $27.7 million worth of shares. Two Sigma Advisors, Citadel Investment Group, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Deerfield Management allocated the biggest weight to Editas Medicine, Inc. (NASDAQ:EDIT), around 0.68% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.14 percent of its 13F equity portfolio to EDIT.
Due to the fact that Editas Medicine, Inc. (NASDAQ:EDIT) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedgies who sold off their entire stakes by the end of the third quarter. Interestingly, Andreas Halvorsen’s Viking Global sold off the largest stake of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $12.2 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund sold off about $3.8 million worth. These transactions are interesting, as total hedge fund interest fell by 5 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Editas Medicine, Inc. (NASDAQ:EDIT) but similarly valued. We will take a look at Minerals Technologies Inc (NYSE:MTX), CIT Group Inc. (NYSE:CIT), Winnebago Industries, Inc. (NYSE:WGO), SJW Group (NYSE:SJW), Simmons First National Corporation (NASDAQ:SFNC), Matson Inc. (NYSE:MATX), and Cathay General Bancorp (NASDAQ:CATY). This group of stocks’ market caps match EDIT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.7 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. That figure was $89 million in EDIT’s case. Winnebago Industries, Inc. (NYSE:WGO) is the most popular stock in this table. On the other hand SJW Group (NYSE:SJW) is the least popular one with only 9 bullish hedge fund positions. Editas Medicine, Inc. (NASDAQ:EDIT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EDIT is 44.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on EDIT as the stock returned 119.1% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.