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Is WAVE Life Sciences Ltd. (NASDAQ:WVE) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to find the winners in the stock market.
WAVE Life Sciences Ltd. (NASDAQ:WVE) has seen a decrease in support from the world's most elite money managers lately. WVE was in 21 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 22 hedge funds in our database with WVE holdings at the end of the previous quarter. Our calculations also showed that WVE isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the recent hedge fund action surrounding WAVE Life Sciences Ltd. (NASDAQ:WVE).
How are hedge funds trading WAVE Life Sciences Ltd. (NASDAQ:WVE)?
At Q4's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WVE over the last 14 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, RA Capital Management held the most valuable stake in WAVE Life Sciences Ltd. (NASDAQ:WVE), which was worth $315.8 million at the end of the fourth quarter. On the second spot was Redmile Group which amassed $94.1 million worth of shares. Moreover, Point72 Asset Management, Bridger Management, and EcoR1 Capital were also bullish on WAVE Life Sciences Ltd. (NASDAQ:WVE), allocating a large percentage of their portfolios to this stock.
Seeing as WAVE Life Sciences Ltd. (NASDAQ:WVE) has witnessed a decline in interest from the aggregate hedge fund industry, it's safe to say that there was a specific group of fund managers who were dropping their positions entirely by the end of the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $0.4 million in stock, and Michael Platt and William Reeves's BlueCrest Capital Mgmt. was right behind this move, as the fund dumped about $0.3 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as WAVE Life Sciences Ltd. (NASDAQ:WVE) but similarly valued. These stocks are Kearny Financial Corp. (NASDAQ:KRNY), Fitbit Inc (NYSE:FIT), Hudbay Minerals Inc. (NYSE:HBM), and Esperion Therapeutics, Inc. (NASDAQ:ESPR). This group of stocks' market values are closest to WVE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KRNY,15,173642,-2 FIT,15,83131,-2 HBM,13,176362,0 ESPR,11,225795,-5 Average,13.5,164733,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $492 million in WVE's case. Kearny Financial Corp. (NASDAQ:KRNY) is the most popular stock in this table. On the other hand Esperion Therapeutics, Inc. (NASDAQ:ESPR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks WAVE Life Sciences Ltd. (NASDAQ:WVE) is more popular among hedge funds. 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. Unfortunately WVE wasn't nearly as popular as these 15 stock and hedge funds that were betting on WVE were disappointed as the stock returned -38.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
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