The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Editas Medicine, Inc. (NASDAQ:EDIT).
Is Editas Medicine, Inc. (NASDAQ:EDIT) a buy, sell, or hold? Prominent investors are in a bearish mood. The number of bullish hedge fund positions decreased by 3 recently. Our calculations also showed that EDIT isn't among the 30 most popular stocks among hedge funds. EDIT was in 15 hedge funds' portfolios at the end of March. There were 18 hedge funds in our database with EDIT positions at the end of the previous quarter.
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' 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.
Let's review the fresh hedge fund action surrounding Editas Medicine, Inc. (NASDAQ:EDIT).
How have hedgies been trading Editas Medicine, Inc. (NASDAQ:EDIT)?
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in EDIT a year ago. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Deerfield Management held the most valuable stake in Editas Medicine, Inc. (NASDAQ:EDIT), which was worth $28.3 million at the end of the first quarter. On the second spot was Viking Global which amassed $22.8 million worth of shares. Moreover, Casdin Capital, D E Shaw, and Valiant Capital were also bullish on Editas Medicine, Inc. (NASDAQ:EDIT), allocating a large percentage of their portfolios to this stock.
Because Editas Medicine, Inc. (NASDAQ:EDIT) has faced falling interest from hedge fund managers, logic holds that there exists a select few money managers that slashed their entire stakes in the third quarter. At the top of the heap, Jonathan Soros's JS Capital dropped the biggest stake of the "upper crust" of funds watched by Insider Monkey, worth an estimated $5 million in stock. Steve Cohen's fund, Point72 Asset Management, also dumped its stock, about $1.3 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds in the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Editas Medicine, Inc. (NASDAQ:EDIT) but similarly valued. We will take a look at FormFactor, Inc. (NASDAQ:FORM), Kearny Financial Corp. (NASDAQ:KRNY), Schweitzer-Mauduit International, Inc. (NYSE:SWM), and Summit Hotel Properties Inc (NYSE:INN). This group of stocks' market values are similar to EDIT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FORM,11,51910,1 KRNY,16,150468,1 SWM,10,23959,2 INN,10,14312,-1 Average,11.75,60162,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $108 million in EDIT's case. Kearny Financial Corp. (NASDAQ:KRNY) is the most popular stock in this table. On the other hand Schweitzer-Mauduit International, Inc. (NYSE:SWM) is the least popular one with only 10 bullish hedge fund positions. Editas Medicine, Inc. (NASDAQ:EDIT) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately EDIT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EDIT were disappointed as the stock returned -7.2% 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 so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.