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. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value 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 SRPT stock a buy? Sarepta Therapeutics Inc (NASDAQ:SRPT) was in 37 hedge funds’ portfolios at the end of December. The all time high for this statistic is 48. SRPT has experienced an increase in support from the world’s most elite money managers recently. There were 35 hedge funds in our database with SRPT holdings at the end of September. Our calculations also showed that SRPT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s review the fresh hedge fund action encompassing Sarepta Therapeutics Inc (NASDAQ:SRPT).
Do Hedge Funds Think SRPT Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the third quarter of 2020. By comparison, 42 hedge funds held shares or bullish call options in SRPT a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Sarepta Therapeutics Inc (NASDAQ:SRPT) was held by Avoro Capital Advisors (venBio Select Advisor), which reported holding $298.4 million worth of stock at the end of December. It was followed by Farallon Capital with a $102.3 million position. Other investors bullish on the company included OrbiMed Advisors, Casdin Capital, and Camber Capital Management. In terms of the portfolio weights assigned to each position Darwin Global Management allocated the biggest weight to Sarepta Therapeutics Inc (NASDAQ:SRPT), around 5.47% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, dishing out 5.14 percent of its 13F equity portfolio to SRPT.
As industrywide interest jumped, key money managers have been driving this bullishness. ARK Investment Management, managed by Catherine D. Wood, initiated the most outsized position in Sarepta Therapeutics Inc (NASDAQ:SRPT). ARK Investment Management had $41.4 million invested in the company at the end of the quarter. Abhishek Trehan’s Darwin Global Management also made a $19.6 million investment in the stock during the quarter. The other funds with brand new SRPT positions are Dmitry Balyasny’s Balyasny Asset Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Vishal Saluja and Pham Quang’s Endurant Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sarepta Therapeutics Inc (NASDAQ:SRPT) but similarly valued. These stocks are Cable One Inc (NYSE:CABO), Penn National Gaming, Inc (NASDAQ:PENN), Omnicom Group Inc. (NYSE:OMC), Ally Financial Inc (NYSE:ALLY), C3.ai, Inc. (NYSE:AI), WPP Plc (NASDAQ:WPP), and The J.M. Smucker Company (NYSE:SJM). This group of stocks’ market values are closest to SRPT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CABO | 17 | 827605 | -6 |
| PENN | 41 | 1324598 | -4 |
| OMC | 34 | 546941 | 0 |
| ALLY | 57 | 2593837 | 4 |
| AI | 37 | 483532 | 37 |
| WPP | 6 | 37552 | -1 |
| SJM | 34 | 580428 | 3 |
| Average | 32.3 | 913499 | 4.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $913 million. That figure was $978 million in SRPT’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand WPP Plc (NASDAQ:WPP) is the least popular one with only 6 bullish hedge fund positions. Sarepta Therapeutics Inc (NASDAQ:SRPT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SRPT is 60.5. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately SRPT wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on SRPT were disappointed as the stock returned -55.3% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Sarepta Therapeutics Inc. (NASDAQ:SRPT)
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Disclosure: None. This article was originally published at Insider Monkey.
