The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Sangamo Therapeutics, Inc. (NASDAQ:SGMO) based on those filings.
Sangamo Therapeutics, Inc. (NASDAQ:SGMO) has seen an increase in support from the world's most elite money managers lately. Our calculations also showed that SGMO isn't among the 30 most popular stocks among hedge funds (click for Q1 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 large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Jeffrey Ray of Great Point Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the key hedge fund action surrounding Sangamo Therapeutics, Inc. (NASDAQ:SGMO).
Hedge fund activity in Sangamo Therapeutics, Inc. (NASDAQ:SGMO)
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SGMO over the last 18 quarters. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, EcoR1 Capital, managed by Oleg Nodelman, holds the biggest position in Sangamo Therapeutics, Inc. (NASDAQ:SGMO). EcoR1 Capital has a $14.7 million position in the stock, comprising 1.5% of its 13F portfolio. Sitting at the No. 2 spot is Tang Capital Management, led by Kevin C. Tang, holding a $13 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Other peers that are bullish encompass Ken Griffin's Citadel Investment Group, Israel Englander's Millennium Management and Eli Casdin's Casdin Capital. In terms of the portfolio weights assigned to each position Tang Capital Management allocated the biggest weight to Sangamo Therapeutics, Inc. (NASDAQ:SGMO), around 1.82% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, earmarking 1.54 percent of its 13F equity portfolio to SGMO.
As industrywide interest jumped, key money managers were leading the bulls' herd. EcoR1 Capital, managed by Oleg Nodelman, assembled the most outsized position in Sangamo Therapeutics, Inc. (NASDAQ:SGMO). EcoR1 Capital had $14.7 million invested in the company at the end of the quarter. Kevin C. Tang's Tang Capital Management also made a $13 million investment in the stock during the quarter. The other funds with brand new SGMO positions are Israel Englander's Millennium Management, Henrik Rhenman's Rhenman & Partners Asset Management, and Jeffrey Jay and David Kroin's Great Point Partners.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Sangamo Therapeutics, Inc. (NASDAQ:SGMO) but similarly valued. These stocks are Cincinnati Bell Inc. (NYSE:CBB), Stoke Therapeutics, Inc. (NASDAQ:STOK), AZZ Incorporated (NYSE:AZZ), and Medifast, Inc. (NYSE:MED). This group of stocks' market valuations resemble SGMO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBB,16,64660,1 STOK,10,141230,0 AZZ,17,30591,1 MED,16,217606,-3 Average,14.75,113522,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $94 million in SGMO's case. AZZ Incorporated (NYSE:AZZ) is the most popular stock in this table. On the other hand Stoke Therapeutics, Inc. (NASDAQ:STOK) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Sangamo Therapeutics, Inc. (NASDAQ:SGMO) is more popular among hedge funds. 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 returned 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on SGMO as the stock returned 70.3% so far in Q2 (through June 17th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.