Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Editas Medicine, Inc. (NASDAQ:EDIT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Editas Medicine, Inc. (NASDAQ:EDIT) a first-rate investment right now? The smart money is turning bullish. The number of long hedge fund bets went up by 1 recently. Our calculations also showed that edit isn’t among the 30 most popular stocks among hedge funds. EDIT was in 18 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 17 hedge funds in our database with EDIT holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s analyze the new hedge fund action regarding Editas Medicine, Inc. (NASDAQ:EDIT).
Hedge fund activity in Editas Medicine, Inc. (NASDAQ:EDIT)
Heading into the first quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the second quarter of 2018. On the other hand, there were a total of 15 hedge funds with a bullish position in EDIT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Deerfield Management was the largest shareholder of Editas Medicine, Inc. (NASDAQ:EDIT), with a stake worth $26.4 million reported as of the end of December. Trailing Deerfield Management was Viking Global, which amassed a stake valued at $21.2 million. Casdin Capital, D E Shaw, and Valiant Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the most outsized position in Editas Medicine, Inc. (NASDAQ:EDIT). Millennium Management had $1.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0.9 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s also examine hedge fund activity in other stocks similar to Editas Medicine, Inc. (NASDAQ:EDIT). These stocks are Casa Systems, Inc. (NASDAQ:CASA), Standard Motor Products, Inc. (NYSE:SMP), PPDAI Group Inc. (NYSE:PPDF), and Tortoise Energy Infrastructure Corporation (NYSE:TYG). All of these 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 8 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $105 million in EDIT’s case. Casa Systems, Inc. (NASDAQ:CASA) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Editas Medicine, Inc. (NASDAQ:EDIT) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately EDIT wasn’t nearly as popular as these 15 stock and hedge funds that were betting on EDIT were disappointed as the stock returned 15.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.