Hedge Funds Are Souring On Sarepta Therapeutics Inc (SRPT)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Sarepta Therapeutics Inc (NASDAQ:SRPT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Sarepta Therapeutics Inc (NASDAQ:SRPT) was in 28 hedge funds’ portfolios at the end of September. The all time high for this statistic is 48. SRPT has seen a decrease in activity from the world’s largest hedge funds lately. There were 34 hedge funds in our database with SRPT holdings at the end of June. Our calculations also showed that SRPT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s view the new hedge fund action regarding Sarepta Therapeutics Inc (NASDAQ:SRPT).

Steven Cohen of Point72 Asset Management

Do Hedge Funds Think SRPT Is A Good Stock To Buy Now?

At third quarter’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the second quarter of 2021. By comparison, 35 hedge funds held shares or bullish call options in SRPT a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (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 $231.2 million at the end of the third quarter. On the second spot was Point72 Asset Management which amassed $170.7 million worth of shares. Casdin Capital, Citadel Investment Group, and Camber Capital Management 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 Tri Locum Partners allocated the biggest weight to Sarepta Therapeutics Inc (NASDAQ:SRPT), around 4.96% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, earmarking 3.63 percent of its 13F equity portfolio to SRPT.

Since Sarepta Therapeutics Inc (NASDAQ:SRPT) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers that elected to cut their entire stakes last quarter. Intriguingly, Catherine D. Wood’s ARK Investment Management sold off the largest position of the 750 funds watched by Insider Monkey, comprising about $39.2 million in stock. Mitchell Blutt’s fund, Consonance Capital Management, also sold off its stock, about $31.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sarepta Therapeutics Inc (NASDAQ:SRPT) but similarly valued. These stocks are Brunswick Corporation (NYSE:BC), First American Financial Corp (NYSE:FAF), Capri Holdings Limited (NYSE:CPRI), IAA, Inc. (NYSE:IAA), Alaska Air Group, Inc. (NYSE:ALK), PVH Corp (NYSE:PVH), and Pearson PLC (NYSE:PSO). All of these stocks’ market caps resemble SRPT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $995 million. That figure was $837 million in SRPT’s case. Capri Holdings Limited (NYSE:CPRI) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 8 bullish hedge fund positions. Sarepta Therapeutics Inc (NASDAQ:SRPT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SRPT is 42.8. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately SRPT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SRPT investors were disappointed as the stock returned -7.6% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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