We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2019. In this article we are going to take a look at smart money sentiment towards CRISPR Therapeutics AG (NASDAQ:CRSP).
Is CRISPR Therapeutics AG (NASDAQ:CRSP) the right investment to pursue these days? The best stock pickers are becoming hopeful. The number of long hedge fund bets improved by 13 recently. Our calculations also showed that CRSP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a gander at the new hedge fund action encompassing CRISPR Therapeutics AG (NASDAQ:CRSP).
How have hedgies been trading CRISPR Therapeutics AG (NASDAQ:CRSP)?
At Q4’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 76% from the third quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in CRSP a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Cormorant Asset Management, managed by Bihua Chen, holds the number one position in CRISPR Therapeutics AG (NASDAQ:CRSP). Cormorant Asset Management has a $60.9 million position in the stock, comprising 2.4% of its 13F portfolio. Coming in second is OrbiMed Advisors, managed by Samuel Isaly, which holds a $46.7 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Charles Clough’s Clough Capital Partners, Renaissance Technologies and Farallon Capital. In terms of the portfolio weights assigned to each position Cormorant Asset Management allocated the biggest weight to CRISPR Therapeutics AG (NASDAQ:CRSP), around 2.43% of its 13F portfolio. Clough Capital Partners is also relatively very bullish on the stock, earmarking 2.31 percent of its 13F equity portfolio to CRSP.
As aggregate interest increased, some big names have jumped into CRISPR Therapeutics AG (NASDAQ:CRSP) headfirst. Citadel Investment Group, managed by Ken Griffin, established the largest position in CRISPR Therapeutics AG (NASDAQ:CRSP). Citadel Investment Group had $12.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $6.3 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Principal Global Investors’s Columbus Circle Investors, and David Harding’s Winton Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CRISPR Therapeutics AG (NASDAQ:CRSP) but similarly valued. These stocks are Lithia Motors Inc (NYSE:LAD), Cimpress NV (NASDAQ:CMPR), Equitrans Midstream Corporation (NYSE:ETRN), and Graham Holdings Co (NYSE:GHC). This group of stocks’ market values are similar to CRSP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAD | 29 | 661944 | 3 |
| CMPR | 18 | 707978 | 6 |
| ETRN | 15 | 379764 | -2 |
| GHC | 18 | 510146 | 0 |
| Average | 20 | 564958 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $565 million. That figure was $298 million in CRSP’s case. Lithia Motors Inc (NYSE:LAD) is the most popular stock in this table. On the other hand Equitrans Midstream Corporation (NYSE:ETRN) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks CRISPR Therapeutics AG (NASDAQ:CRSP) is more popular among hedge funds. 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 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately CRSP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CRSP were disappointed as the stock returned -31.4% during the first two and a half months of 2020 (through March 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
