Is Sangamo Biosciences, Inc. (SGMO) a Good Stock to Invest in?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

In this article, we are going to take a closer look at the hedge fund sentiment towards Sangamo Biosciences, Inc. (NASDAQ:SGMO). Overall, it looks like hedge funds are taking a bearish view. During the third quarter, the number of investors tracked by Insider Monkey long SGMO declined by three to 17. 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 Village Super Market, Inc. (NASDAQ:VLGEA), AG Mortgage Investment Trust Inc (NYSE:MITT), and Career Education Corp. (NASDAQ:CECO) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Keeping this in mind, we’re going to check out the key action surrounding Sangamo Biosciences, Inc. (NASDAQ:SGMO).

What does the smart money think about Sangamo Biosciences, Inc. (NASDAQ:SGMO)?

Heading into the fourth quarter of 2016, a total of 17 of the hedge funds tracked by Insider Monkey were long Sangamo Biosciences, Inc. (NASDAQ:SGMO), down by 15% over the quarter. By comparison, 18 hedge funds held shares or bullish call options in SGMO heading into this year. So, let’s review 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 number one position in Sangamo Biosciences, Inc. (NASDAQ:SGMO). Baker Bros. Advisors has a $18.8 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Phill Gross and Robert Atchinson’s Adage Capital Management, which reported a $11.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish comprise Bihua Chen’s Cormorant Asset Management, Peter Kolchinsky’s RA Capital Management, and Samuel Isaly’s OrbiMed Advisors. 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.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. At the top of the heap, Malcolm Fairbairn’s Ascend Capital dropped the biggest position of all the hedgies monitored by Insider Monkey, comprising an estimated $2.4 million in stock. Stuart Weisbrod’s fund, Iguana Healthcare Management, also dumped its stock, worth about $700,000.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Sangamo Biosciences, Inc. (NASDAQ:SGMO) but similarly valued. These stocks are Village Super Market, Inc. (NASDAQ:VLGEA), AG Mortgage Investment Trust Inc (NYSE:MITT), Career Education Corp. (NASDAQ:CECO), and Cascade Bancorp (NASDAQ:CACB). This group of stocks’ market valuations match SGMO’s market valuation.

As you can see these stocks had an average of nine investors holding long positions and the average amount invested in these stocks was $58 million. That figure was $60 million in SGMO’s case. Career Education Corp. (NASDAQ:CECO) is the most popular stock in this table, while Village Super Market, Inc. (NASDAQ:VLGEA) is the least popular one with only five bullish hedge fund positions. Compared to these stocks Sangamo Biosciences, Inc. (NASDAQ:SGMO) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.