Sarepta Therapeutics Inc (NASDAQ:SRPT) investors should pay attention to an increase in hedge fund sentiment recently.
According to most traders, hedge funds are perceived as underperforming, old investment tools of yesteryear. While there are more than 8000 funds with their doors open at present, we hone in on the upper echelon of this group, close to 450 funds. Most estimates calculate that this group oversees most of all hedge funds’ total asset base, and by watching their best picks, we have formulated a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Just as key, positive insider trading sentiment is a second way to parse down the investments you’re interested in. Just as you’d expect, there are plenty of reasons for an executive to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the useful potential of this tactic if investors understand where to look (learn more here).
Now, it’s important to take a peek at the latest action regarding Sarepta Therapeutics Inc (NASDAQ:SRPT).
What does the smart money think about Sarepta Therapeutics Inc (NASDAQ:SRPT)?
At year’s end, a total of 16 of the hedge funds we track were long in this stock, a change of 60% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings substantially.
According to our comprehensive database, Perceptive Advisors, managed by Joseph Edelman, holds the largest position in Sarepta Therapeutics Inc (NASDAQ:SRPT). Perceptive Advisors has a $33 million position in the stock, comprising 5.9% of its 13F portfolio. Sitting at the No. 2 spot is James E. Flynn of Deerfield Management, with a $19 million position; 1.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Steven Cohen’s SAC Capital Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management and Joseph Edelman’s Perceptive Advisors.
As aggregate interest increased, key hedge funds have jumped into Sarepta Therapeutics Inc (NASDAQ:SRPT) headfirst. Deerfield Management, managed by James E. Flynn, created the most valuable position in Sarepta Therapeutics Inc (NASDAQ:SRPT). Deerfield Management had 19 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $10 million position during the quarter. The other funds with brand new SRPT positions are Joseph Edelman’s Perceptive Advisors, Jacob Gottlieb’s Visium Asset Management, and Christopher Medlock James’s Partner Fund Management.
How have insiders been trading Sarepta Therapeutics Inc (NASDAQ:SRPT)?
Bullish insider trading is best served when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time frame, Sarepta Therapeutics Inc (NASDAQ:SRPT) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Sarepta Therapeutics Inc (NASDAQ:SRPT). These stocks are Acorda Therapeutics Inc (NASDAQ:ACOR), Nektar Therapeutics (NASDAQ:NKTR), VIVUS, Inc. (NASDAQ:VVUS), Santarus, Inc. (NASDAQ:SNTS), and Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX). This group of stocks are the members of the biotechnology industry and their market caps resemble SRPT’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Acorda Therapeutics Inc (NASDAQ:ACOR)||10||0||7|
|Nektar Therapeutics (NASDAQ:NKTR)||9||0||1|
|VIVUS, Inc. (NASDAQ:VVUS)||19||0||0|
|Santarus, Inc. (NASDAQ:SNTS)||16||1||12|
|Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX)||7||2||0|
With the returns shown by Insider Monkey’s research, everyday investors should always keep an eye on hedge fund and insider trading activity, and Sarepta Therapeutics Inc (NASDAQ:SRPT) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.