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Did Hedge Funds Drop The Ball On Spark Therapeutics Inc (ONCE) ?

Asma UL Husna

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Spark Therapeutics Inc (NASDAQ:ONCE) in this article.

Spark Therapeutics Inc (NASDAQ:ONCE) has seen a decrease in hedge fund sentiment lately. ONCE was in 15 hedge funds' portfolios at the end of December. There were 21 hedge funds in our database with ONCE positions at the end of the previous quarter. Our calculations also showed that ONCE isn't among the 30 most popular stocks among hedge funds.

In the eyes of most stock holders, hedge funds are perceived as unimportant, outdated financial vehicles of the past. While there are more than 8000 funds in operation at present, Our experts hone in on the crème de la crème of this group, around 750 funds. It is estimated that this group of investors manage most of all hedge funds' total asset base, and by tracking their first-class equity investments, Insider Monkey has brought to light numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by nearly 5 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Felix Baker - Baker Bros.

Let's take a look at the key hedge fund action regarding Spark Therapeutics Inc (NASDAQ:ONCE).

How are hedge funds trading Spark Therapeutics Inc (NASDAQ:ONCE)?

At the end of the fourth quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ONCE over the last 14 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

ONCE_apr2019

The largest stake in Spark Therapeutics Inc (NASDAQ:ONCE) was held by Partner Fund Management, which reported holding $85.5 million worth of stock at the end of December. It was followed by Baker Bros. Advisors with a $54.2 million position. Other investors bullish on the company included EcoR1 Capital, D E Shaw, and Casdin Capital.

Due to the fact that Spark Therapeutics Inc (NASDAQ:ONCE) has experienced declining sentiment from the aggregate hedge fund industry, it's safe to say that there were a few hedgies that slashed their positions entirely heading into Q3. Intriguingly, Steven Boyd's Armistice Capital said goodbye to the largest investment of the 700 funds followed by Insider Monkey, totaling close to $12.4 million in stock. Israel Englander's fund, Millennium Management, also dumped its stock, about $4 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 6 funds heading into Q3.

Let's check out hedge fund activity in other stocks similar to Spark Therapeutics Inc (NASDAQ:ONCE). These stocks are FGL Holdings (NYSE:FG), Rapid7 Inc (NASDAQ:RPD), Cars.com Inc. (NYSE:CARS), and Kaiser Aluminum Corp. (NASDAQ:KALU). All of these stocks' market caps match ONCE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FG,29,207993,1 RPD,24,255954,7 CARS,18,306774,-12 KALU,14,122108,-3 Average,21.25,223207,-1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $329 million in ONCE's case. FGL Holdings (NYSE:FG) is the most popular stock in this table. On the other hand Kaiser Aluminum Corp. (NASDAQ:KALU) is the least popular one with only 14 bullish hedge fund positions. Spark Therapeutics Inc (NASDAQ:ONCE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on ONCE as the stock returned 182.6% and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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