Wasatch Micro Cap Fund’s Q1 Top Detractor: Frequency Therapeutics Inc. (FREQ)

Wasatch Global Investors, an investment management firm, published its “Wasatch Micro Cap Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 10.95% was recorded by the fund for the Q1 of 2021, trailing the benchmark, Russell Microcap Index, which rose 23.89% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Wasatch Micro Cap, in its Q1 2021 investor letter, mentioned Frequency Therapeutics, Inc. (NASDAQ: FREQ), and shared their insights on the company. Frequency Therapeutics, Inc. is a Woburn, Massachusetts-based biotechnology company that currently has a $355.8 million market capitalization. Since the beginning of the year, FREQ delivered a -70.50% return, while its 12-month gains are down by -43.04%. As of May 07, 2021, the stock closed at $10.40 per share.

Here is what Wasatch Micro Cap has to say about Frequency Therapeutics, Inc. in its Q1 2021 investor letter:

“The greatest detractor from Fund performance for the quarter was Frequency Therapeutics, Inc. (FREQ), a clinical-stage biotechnology stock. Investors reacted harshly to disappointing interim data from a Phase 2a study evaluating the company’s lead product candidate in treating sensorineural hearing loss. Even if the drug were eventually to win approval, the study’s failure sets the timeline back about 12 to 18 months. In the meantime, we sold the stock to harvest the loss for tax purposes and to seek better opportunities elsewhere.”

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Our calculations show that Frequency Therapeutics, Inc. (NASDAQ: FREQ) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Frequency Therapeutics, Inc. was in 9 hedge fund portfolios compared to 7 funds in the third quarter. FREQ delivered a -80.96% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.