The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Sarepta Therapeutics Inc (NASDAQ:SRPT) based on those filings.
Is SRPT a good stock to buy now? Sarepta Therapeutics Inc (NASDAQ:SRPT) has experienced a decrease in hedge fund sentiment of late. Sarepta Therapeutics Inc (NASDAQ:SRPT) was in 35 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 48. Our calculations also showed that SRPT 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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. Keeping this in mind let’s take a glance at the latest hedge fund action surrounding Sarepta Therapeutics Inc (NASDAQ:SRPT).
Do Hedge Funds Think SRPT Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SRPT over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in Sarepta Therapeutics Inc (NASDAQ:SRPT), which was worth $235.2 million at the end of the third quarter. On the second spot was Adage Capital Management which amassed $119.4 million worth of shares. Farallon Capital, OrbiMed Advisors, and Casdin Capital 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 Logos Capital allocated the biggest weight to Sarepta Therapeutics Inc (NASDAQ:SRPT), around 5.1% of its 13F portfolio. Soleus Capital is also relatively very bullish on the stock, earmarking 3.44 percent of its 13F equity portfolio to SRPT.
Due to the fact that Sarepta Therapeutics Inc (NASDAQ:SRPT) has witnessed falling interest from hedge fund managers, it’s easy to see that there exists a select few money managers that slashed their entire stakes last quarter. At the top of the heap, Mitchell Blutt’s Consonance Capital Management sold off the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $68.3 million in stock. Stanley Druckenmiller’s fund, Duquesne Capital, also dropped its stock, about $27.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sarepta Therapeutics Inc (NASDAQ:SRPT) but similarly valued. These stocks are Suzano S.A. (NYSE:SUZ), Erie Indemnity Company (NASDAQ:ERIE), Icahn Enterprises LP (NASDAQ:IEP), AngloGold Ashanti Limited (NYSE:AU), Shinhan Financial Group Co., Ltd. (NYSE:SHG), Lumen Technologies, Inc. (NYSE:LUMN), and W.R. Berkley Corporation (NYSE:WRB). This group of stocks’ market values are similar to SRPT’s market value.
|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 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $1774 million. That figure was $881 million in SRPT’s case. Lumen Technologies, Inc. (NYSE:LUMN) is the most popular stock in this table. On the other hand Suzano S.A. (NYSE:SUZ) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Sarepta Therapeutics Inc (NASDAQ:SRPT) is more popular among hedge funds. Our overall hedge fund sentiment score for SRPT is 72.9. 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 returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on SRPT as the stock returned 24.9% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.