Is Sarepta Therapeutics Inc (NASDAQ:SRPT) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Sarepta Therapeutics Inc (NASDAQ:SRPT) has seen an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that srpt isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to analyze the latest hedge fund action regarding Sarepta Therapeutics Inc (NASDAQ:SRPT).
What does the smart money think about Sarepta Therapeutics Inc (NASDAQ:SRPT)?
At the end of the first quarter, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SRPT over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Adage Capital Management held the most valuable stake in Sarepta Therapeutics Inc (NASDAQ:SRPT), which was worth $196.7 million at the end of the first quarter. On the second spot was venBio Select Advisor which amassed $142.4 million worth of shares. Moreover, OrbiMed Advisors, Farallon Capital, and Cadian Capital were also bullish on Sarepta Therapeutics Inc (NASDAQ:SRPT), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key money managers were leading the bulls’ herd. Steelhead Partners, managed by Michael Johnston, initiated the most outsized position in Sarepta Therapeutics Inc (NASDAQ:SRPT). Steelhead Partners had $43.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $23.8 million investment in the stock during the quarter. The following funds were also among the new SRPT investors: Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Ori Hershkovitz’s Nexthera Capital.
Let’s also examine hedge fund activity in other stocks similar to Sarepta Therapeutics Inc (NASDAQ:SRPT). We will take a look at Credit Acceptance Corp. (NASDAQ:CACC), Lear Corporation (NYSE:LEA), Under Armour Inc (NYSE:UA), and Whirlpool Corporation (NYSE:WHR). This group of stocks’ market values match SRPT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CACC | 28 | 1089976 | 6 |
| LEA | 40 | 804768 | 11 |
| UA | 30 | 934725 | 3 |
| WHR | 18 | 547948 | -2 |
| Average | 29 | 844354 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $844 million. That figure was $1207 million in SRPT’s case. Lear Corporation (NYSE:LEA) is the most popular stock in this table. On the other hand Whirlpool Corporation (NYSE:WHR) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Sarepta Therapeutics Inc (NASDAQ:SRPT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately SRPT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SRPT were disappointed as the stock returned -2.5% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
