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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of CRISPR Therapeutics AG (NASDAQ:CRSP) based on that data and determine whether they were really smart about the stock.
CRISPR Therapeutics AG (NASDAQ:CRSP) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 31 hedge funds' portfolios at the end of June. Our calculations also showed that CRSP isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as The Gap Inc. (NYSE:GPS), ServiceMaster Global Holdings Inc (NYSE:SERV), and Primerica, Inc. (NYSE:PRI) to gather more data points. Our calculations also showed that CRSP isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of formulas investors have at their disposal to analyze publicly traded companies. A pair of the most underrated formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform their index-focused peers by a significant margin (see the details here).
Samuel Isaly of OrbiMed Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let's review the new hedge fund action encompassing CRISPR Therapeutics AG (NASDAQ:CRSP).
What does smart money think about CRISPR Therapeutics AG (NASDAQ:CRSP)?
Heading into the third quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in CRSP a year ago. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, OrbiMed Advisors held the most valuable stake in CRISPR Therapeutics AG (NASDAQ:CRSP), which was worth $51.3 million at the end of the third quarter. On the second spot was Valiant Capital which amassed $34.4 million worth of shares. Cormorant Asset Management, Renaissance Technologies, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Valiant Capital allocated the biggest weight to CRISPR Therapeutics AG (NASDAQ:CRSP), around 3.42% of its 13F portfolio. Clough Capital Partners is also relatively very bullish on the stock, dishing out 2.14 percent of its 13F equity portfolio to CRSP.
Due to the fact that CRISPR Therapeutics AG (NASDAQ:CRSP) has witnessed declining sentiment from the aggregate hedge fund industry, it's easy to see that there exists a select few money managers who sold off their entire stakes heading into Q3. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, comprising an estimated $11.1 million in stock, and Arsani William's Logos Capital was right behind this move, as the fund cut about $4.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to CRISPR Therapeutics AG (NASDAQ:CRSP). These stocks are The Gap Inc. (NYSE:GPS), ServiceMaster Global Holdings Inc (NYSE:SERV), Primerica, Inc. (NYSE:PRI), Targa Resources Corp (NYSE:TRGP), BlackLine, Inc. (NASDAQ:BL), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), and Cullen/Frost Bankers, Inc. (NYSE:CFR). This group of stocks' market caps match CRSP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GPS,38,459419,14 SERV,35,725891,4 PRI,25,385205,2 TRGP,31,289537,2 BL,18,227498,0 RARE,24,352560,6 CFR,13,21532,-5 Average,26.3,351663,3.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $352 million. That figure was $297 million in CRSP's case. The Gap Inc. (NYSE:GPS) is the most popular stock in this table. On the other hand Cullen/Frost Bankers, Inc. (NYSE:CFR) is the least popular one with only 13 bullish hedge fund positions. CRISPR Therapeutics AG (NASDAQ:CRSP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CRSP is 71. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. Hedge funds were also right about betting on CRSP as the stock returned 15.3% during Q3 (through September 14th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.