We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Sarepta Therapeutics Inc (NASDAQ:SRPT).
Is Sarepta Therapeutics Inc (NASDAQ:SRPT) a buy right now? Investors who are in the know are in a bearish mood. The number of bullish hedge fund bets fell by 2 lately. Our calculations also showed that SRPT isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s review the fresh hedge fund action surrounding Sarepta Therapeutics Inc (NASDAQ:SRPT).
What does the smart money think about Sarepta Therapeutics Inc (NASDAQ:SRPT)?
At the end of the fourth quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in SRPT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sarepta Therapeutics Inc (NASDAQ:SRPT) was held by Adage Capital Management, which reported holding $256.5 million worth of stock at the end of September. It was followed by venBio Select Advisor with a $139.1 million position. Other investors bullish on the company included OrbiMed Advisors, Farallon Capital, and Camber Capital Management.
Since Sarepta Therapeutics Inc (NASDAQ:SRPT) has experienced a decline in interest from hedge fund managers, it’s easy to see that there were a few funds that elected to cut their full holdings heading into Q3. Intriguingly, D. E. Shaw’s D E Shaw dumped the biggest position of all the hedgies followed by Insider Monkey, totaling about $19.8 million in stock. Christopher James’s fund, Partner Fund Management, also said goodbye to its stock, about $19.8 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks similar to Sarepta Therapeutics Inc (NASDAQ:SRPT). These stocks are Service Corporation International (NYSE:SCI), Cemex SAB de CV (NYSE:CX), Hyatt Hotels Corporation (NYSE:H), and West Pharmaceutical Services Inc. (NYSE:WST). This group of stocks’ market caps are closest to SRPT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCI | 17 | 523621 | 2 |
| CX | 10 | 100016 | -3 |
| H | 25 | 638419 | -6 |
| WST | 20 | 203499 | 3 |
| Average | 18 | 366389 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $940 million in SRPT’s case. Hyatt Hotels Corporation (NYSE:H) is the most popular stock in this table. On the other hand Cemex SAB de CV (NYSE:CX) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Sarepta Therapeutics Inc (NASDAQ:SRPT) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately SRPT wasn’t in this group. Hedge funds that bet on SRPT were disappointed as the stock returned 13.6% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
