Hedge Fund Sentiment Is Stagnant On 10x Genomics, Inc. (TXG)

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was 10x Genomics, Inc. (NASDAQ:TXG).

10x Genomics, Inc. (NASDAQ:TXG) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that TXG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare TXG to other stocks including MarketAxess Holdings Inc. (NASDAQ:MKTX), DLocal Limited (NASDAQ:DLO), and Repligen Corporation (NASDAQ:RGEN) to get a better sense of its popularity.

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 gander at the latest hedge fund action surrounding 10x Genomics, Inc. (NASDAQ:TXG).

James Dondero of Highland Capital Management

Do Hedge Funds Think TXG Is A Good Stock To Buy Now?

At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TXG over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in 10x Genomics, Inc. (NASDAQ:TXG) was held by ARK Investment Management, which reported holding $451.6 million worth of stock at the end of September. It was followed by 12 West Capital Management with a $279.8 million position. Other investors bullish on the company included JS Capital, Marshall Wace LLP, and Harvard Management Co. In terms of the portfolio weights assigned to each position 12 West Capital Management allocated the biggest weight to 10x Genomics, Inc. (NASDAQ:TXG), around 12.76% of its 13F portfolio. Andar Capital is also relatively very bullish on the stock, designating 5.34 percent of its 13F equity portfolio to TXG.

Since 10x Genomics, Inc. (NASDAQ:TXG) has faced falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedge funds who sold off their full holdings heading into Q4. Intriguingly, Simon Sadler’s Segantii Capital sold off the biggest investment of all the hedgies watched by Insider Monkey, comprising close to $4.9 million in stock, and Mark Coe’s Intrinsic Edge Capital was right behind this move, as the fund cut about $3.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as 10x Genomics, Inc. (NASDAQ:TXG) but similarly valued. We will take a look at MarketAxess Holdings Inc. (NASDAQ:MKTX), DLocal Limited (NASDAQ:DLO), Repligen Corporation (NASDAQ:RGEN), Olaplex Holdings Inc. (NASDAQ:OLPX), WPP Plc (NYSE:WPP), James Hardie Industries plc (NYSE:JHX), and Molina Healthcare, Inc. (NYSE:MOH). All of these stocks’ market caps resemble TXG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $713 million. That figure was $963 million in TXG’s case. Olaplex Holdings Inc. (NASDAQ:OLPX) is the most popular stock in this table. On the other hand WPP Plc (NYSE:WPP) is the least popular one with only 5 bullish hedge fund positions. 10x Genomics, Inc. (NASDAQ:TXG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TXG is 54.9. 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. 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 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately TXG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TXG were disappointed as the stock returned -1.4% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.