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Orchid Island Capital Inc (ORC), Sarepta Therapeutics Inc (SRPT) & First Bancorp (FBP) Plunging: Were Hedge Funds Right About These Stocks?

Heading into the second quarter, there was a change of 25% in hedge funds holding Sarepta Therapeutics Inc (NASDAQ:SRPT) during the first quarter, with 15 hedge funds holding long positions in the stock at the end of the first quarter. Even though the number of hedge fund holdings in the stock went up by three, there was only a 1.3% increase in aggregate capital invested in the stock by these hedge funds. The stock had lost around 7.5% of its value during the first quarter though, which accounts for the minimal gains and shows funds were bullish on the stock. Looking at the insider activity on the stock, there were no insider sales of the stock, but Sarepta CEO Garabedian Nishan Christopher and Senior VP Edward Kaye purchased around 800 shares each during the first quarter. Joseph Edelman‘s Perceptive Advisors held the largest position in the stock, with around 2.2 million shares valued at $29.3 million at the end of the first quarter.

Joseph Edelman
Joseph Edelman
Perceptive Advisors

Financial Holding Company First Bancorp (NYSE:FBP)’s stock took a huge dip of around 15% so far today. This drop was mainly due to Guggenheim’s downgrade of the stock to a ‘Neutral’ rating from a ‘Buy’ rating. In the last couple of months there were other downgrades too, from both Zachs and TheStreet. But did the hedge funds expect that this stock would plunge like this?

There was no change in the number of hedge funds holding long positions in the stock at the end of the first quarter. But there were a few hedge funds who sold out of their stake in the company and there were a few others who opened up fresh positions in the stock during the first quarter. There was also a 5% increase in aggregate capital invested in the stock by hedge funds we track, to $359.5 million, though the stock jumped by around 7.5% during the same time, indicating that hedge funds were slightly bearish on the stock. There were no insider sales or purchases of the stock over the last few months. Howard Marks‘ Oaktree Capital Management holds the largest position in the stock as of March 31, with 41.8 million shares valued at $259.4 million.

Hedge funds were mildly bearish on Orchid Island Capital and First Bancorp, but hedge funds were positive on Sarepta Therapeutics. Despite the fact that Sarepta Therapeutics has lost around 8% today, the stock had gained around 100% since the beginning of this year, so hedge funds certainly haven’t lost out on anything because of today’s drop and appear to have been correct in their bullish assessment. Orchid and First Bancorp on the other hand have not gained significantly since the beginning of this year, so hedge funds remaining bearish on the stock also seems to have been the wise choice, as it appears they have correctly predicted the short-term performance of all three of today’s big losers.

Disclosure: None

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