How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding SomaLogic Inc. (NASDAQ:SLGC) and determine whether hedge funds had an edge regarding this stock.
Is SomaLogic Inc. (NASDAQ:SLGC) undervalued? Money managers were taking a bullish view. The number of bullish hedge fund positions improved by 37 recently. SomaLogic Inc. (NASDAQ:SLGC) was in 37 hedge funds’ portfolios at the end of September. Our calculations also showed that SLGC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Keith Meister of Corvex Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a peek at the key hedge fund action encompassing SomaLogic Inc. (NASDAQ:SLGC).
Do Hedge Funds Think SLGC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 37 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in SLGC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Casdin Capital was the largest shareholder of SomaLogic Inc. (NASDAQ:SLGC) , with a stake worth $153.5 million reported as of the end of September. Trailing Casdin Capital was ARK Investment Management, which amassed a stake valued at $78.5 million. Farallon Capital, Redmile Group, and Corvex Capital 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 Casdin Capital allocated the biggest weight to SomaLogic Inc. (NASDAQ:SLGC) , around 3.82% of its 13F portfolio. SB Management is also relatively very bullish on the stock, designating 2.79 percent of its 13F equity portfolio to SLGC.
As aggregate interest increased, some big names have been driving this bullishness. Casdin Capital, managed by Eli Casdin, established the biggest position in SomaLogic Inc. (NASDAQ:SLGC) . Casdin Capital had $153.5 million invested in the company at the end of the quarter. Catherine D. Wood’s ARK Investment Management also made a $78.5 million investment in the stock during the quarter. The following funds were also among the new SLGC investors: Farallon Capital, Jeremy Green’s Redmile Group, and Keith Meister’s Corvex Capital.
Let’s go over hedge fund activity in other stocks similar to SomaLogic Inc. (NASDAQ:SLGC) . We will take a look at O-I Glass, Inc. (NYSE:OI), Glaukos Corporation (NYSE:GKOS), First Financial Bancorp (NASDAQ:FFBC), Hillman Solutions Corp. (NASDAQ:HLMN), Telephone & Data Systems, Inc. (NYSE:TDS), Astra Space Inc. (NASDAQ:ASTR), and D-MARKET Elektronik Hizmetler ve Ticaret Anonim Sirketi (NASDAQ:HEPS). This group of stocks’ market valuations resemble SLGC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OI | 32 | 258993 | 8 |
| GKOS | 23 | 176344 | 4 |
| FFBC | 7 | 10840 | 0 |
| HLMN | 25 | 481224 | 25 |
| TDS | 19 | 120636 | 1 |
| ASTR | 13 | 85412 | 1 |
| HEPS | 7 | 14494 | 7 |
| Average | 18 | 163992 | 6.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $648 million in SLGC’s case. O-I Glass, Inc. (NYSE:OI) is the most popular stock in this table. On the other hand First Financial Bancorp (NASDAQ:FFBC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks SomaLogic Inc. (NASDAQ:SLGC) is more popular among hedge funds. Our overall hedge fund sentiment score for SLGC is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, SLGC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SLGC were disappointed as the stock returned -30.8% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
