Why Sarepta Therapeutics, Ralph Lauren, Fifth Third Bancorp, and Two Other Stocks Are in Spotlight on Friday

WTI crude futures have sank below the $50 per barrel mark around noon as traders brace for another potential rise in the rig count. In addition, all three major indexes are in the red as the U.S. unemployment rate rose to 5%.

In this article, we will take a closer look at five stocks, Sarepta Therapeutics Inc (NASDAQ:SRPT), Ralph Lauren Corp (NYSE:RL), Fifth Third Bancorp (NASDAQ:FITB), Virgin America Inc (NASDAQ:VA), and Alaska Air Group, Inc. (NYSE:ALK), and the reasons why each is trending. We will also assess the hedge fund sentiment towards these stocks, based on data from the last 13F filings of some 740 investors we track at Insider Monkey.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).

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Sarepta Therapeutics Inc (NASDAQ:SRPT) shares are down by 6.8% after Anthem Inc (NYSE:ANTM) said the following about the biotech’s lead product Exondys 51:

“The use of eteplirsen is considered investigational and not medically necessary for all indications, including but not limited to the treatment of Duchenne muscular dystrophy.

That policy indicates that Anthem probably won’t cover 100% of the cost (if it covers it at all) like some other insurers purportedly will. Exondys 51 has received accelerated approval for the treatment of individuals who have a confirmed mutation of the dystrophin gene that is amenable to exon 51 skipping. Steve Cohen’s Point72 Asset Management owned 2.74 million shares of Sarepta Therapeutics Inc (NASDAQ:SRPT) at the end of June.

Ralph Lauren Corp (NYSE:RL) shares are 2% in the green after Goldman Sachs added the stock to its ‘Conviction Buy’ list. As Ralph Lauren CEO Stefan Larsson has been the top-guy for almost one year, analyst Lindsay Drucker Man thinks that “foundational elements for a successful turnaround are in place”. She thinks the company’s inventory will fall noticeably over the next year, and that Ralph Lauren’s costs will also become more efficient as restructuring initiatives kick in. Goldman has a $120 price target on the stock. A total of 32 funds from our database owned shares of Ralph Lauren Corp (NYSE:RL) at the end of the second quarter, up by two funds from the previous quarter.

On the next page, we dig deeper into why investors are watching Fifth Third Bancorp, Virgin America, and Alaska Air Group.

Fifth Third Bancorp (NASDAQ:FITB) shares are 0.8% in the red after Ken Usdin, analyst at Jefferies, downgraded the bank to ‘Hold’ from ‘Buy’, citing valuation as the primary reason for his ratings change. Shares of Fifth Third have rallied to $20.57 from $16 a share in June when people were still concerned about the Brexit. Jefferies has a price target of $22 per share, up from its previous $19.50. The number of funds tracked by us with holdings in Fifth Third Bancorp (NASDAQ:FITB) rose by seven quarter-over-quarter to 27 at the end of June.

Virgin America Inc (NASDAQ:VA) and Alaska Air Group, Inc. (NYSE:ALK) are in the spotlight after CTFN reported that Alaska Air Group is working on a package of potential remedies to address the Department of Justice’s concerns over the company’s pending purchase of Virgin America. If the merger goes through, the two companies could realize substantial synergies. In other news, traders are watching both stocks after the CEO of Delta Air Lines, Inc. (NYSE:DAL) said: “We had the strongest summer in our history”. That presumably is good news for the whole industry and not just Delta.  Of the around 749 funds that we track, 25 were long Virgin America Inc (NASDAQ:VA) and 42 held shares of Alaska Air Group, Inc. (NYSE:ALK) at the end of the second quarter.

Disclosure: None