Hedge Funds Are Cashing Out Of Pacific Biosciences of California, Inc. (PACB)

In this article we will take a look at whether hedge funds think Pacific Biosciences of California, Inc. (NASDAQ:PACB) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Pacific Biosciences of California, Inc. (NASDAQ:PACB) shareholders have witnessed a decrease in hedge fund sentiment recently. Pacific Biosciences of California, Inc. (NASDAQ:PACB) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 28. There were 28 hedge funds in our database with PACB holdings at the end of June. Our calculations also showed that PACB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Keeping this in mind we’re going to take a peek at the latest hedge fund action encompassing Pacific Biosciences of California, Inc. (NASDAQ:PACB).

Adam Usdan of Trellus Management

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

At third quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PACB over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, ARK Investment Management held the most valuable stake in Pacific Biosciences of California, Inc. (NASDAQ:PACB), which was worth $580.6 million at the end of the third quarter. On the second spot was SB Management which amassed $208.4 million worth of shares. Casdin Capital, Baker Bros. Advisors, and Farallon 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 SB Management allocated the biggest weight to Pacific Biosciences of California, Inc. (NASDAQ:PACB), around 21.35% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, designating 5.08 percent of its 13F equity portfolio to PACB.

Due to the fact that Pacific Biosciences of California, Inc. (NASDAQ:PACB) has experienced a decline in interest from hedge fund managers, it’s easy to see that there was a specific group of money managers who sold off their entire stakes by the end of the third quarter. Interestingly, Andreas Halvorsen’s Viking Global dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $44.5 million in stock, and Kevin Molloy’s Iron Triangle Partners was right behind this move, as the fund cut about $34.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Pacific Biosciences of California, Inc. (NASDAQ:PACB). These stocks are Dingdong (Cayman) Limited (NYSE:DDL), AbCellera Biologics Inc. (NASDAQ:ABCL), Amplitude Inc. (NASDAQ:AMPL), Bank OZK (NASDAQ:OZK), Crane Co. (NYSE:CR), Blue Owl Capital Inc. (NYSE:OWL), and KBR, Inc. (NYSE:KBR). All of these stocks’ market caps are closest to PACB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $549 million. That figure was $1341 million in PACB’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand Dingdong (Cayman) Limited (NYSE:DDL) is the least popular one with only 5 bullish hedge fund positions. Pacific Biosciences of California, Inc. (NASDAQ:PACB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PACB is 75.2. 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 PACB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PACB were disappointed as the stock returned -17.9% 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.