Is Adaptive Biotechnologies Corporation (NASDAQ:ADPT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Adaptive Biotechnologies Corporation (NASDAQ:ADPT) was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 38. ADPT shareholders have witnessed a decrease in hedge fund sentiment recently. There were 29 hedge funds in our database with ADPT holdings at the end of March. Our calculations also showed that ADPT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a look at the new hedge fund action surrounding Adaptive Biotechnologies Corporation (NASDAQ:ADPT).
Do Hedge Funds Think ADPT Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the first quarter of 2020. On the other hand, there were a total of 28 hedge funds with a bullish position in ADPT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Viking Global was the largest shareholder of Adaptive Biotechnologies Corporation (NASDAQ:ADPT), with a stake worth $1225.5 million reported as of the end of June. Trailing Viking Global was Matrix Capital Management, which amassed a stake valued at $482.2 million. ARK Investment Management, Casdin Capital, and SB Management 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 Tiger Management allocated the biggest weight to Adaptive Biotechnologies Corporation (NASDAQ:ADPT), around 7.97% of its 13F portfolio. Matrix Capital Management is also relatively very bullish on the stock, designating 5.27 percent of its 13F equity portfolio to ADPT.
Seeing as Adaptive Biotechnologies Corporation (NASDAQ:ADPT) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of fund managers that elected to cut their positions entirely in the second quarter. At the top of the heap, Renaissance Technologies cut the biggest stake of the 750 funds followed by Insider Monkey, worth about $6.5 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dropped about $1.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Adaptive Biotechnologies Corporation (NASDAQ:ADPT) but similarly valued. These stocks are Kornit Digital Ltd. (NASDAQ:KRNT), Duck Creek Technologies, Inc. (NASDAQ:DCT), nCino, Inc. (NASDAQ:NCNO), Vroom, Inc. (NASDAQ:VRM), Exelixis, Inc. (NASDAQ:EXEL), Select Medical Holdings Corporation (NYSE:SEM), and Herbalife Nutrition Ltd. (NYSE:HLF). This group of stocks’ market valuations are similar to ADPT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRNT | 21 | 205384 | -3 |
| DCT | 18 | 255841 | -1 |
| NCNO | 25 | 412906 | 4 |
| VRM | 21 | 180671 | 0 |
| EXEL | 33 | 802812 | 6 |
| SEM | 24 | 251021 | 2 |
| HLF | 40 | 2095168 | 0 |
| Average | 26 | 600543 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $601 million. That figure was $2217 million in ADPT’s case. Herbalife Nutrition Ltd. (NYSE:HLF) is the most popular stock in this table. On the other hand Duck Creek Technologies, Inc. (NASDAQ:DCT) is the least popular one with only 18 bullish hedge fund positions. Adaptive Biotechnologies Corporation (NASDAQ:ADPT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADPT is 44.8. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately ADPT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ADPT were disappointed as the stock returned -18% since the end of June (through 10/15) 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.
Follow Adaptive Biotechnologies Corp (NASDAQ:ADPT)
Follow Adaptive Biotechnologies Corp (NASDAQ:ADPT)
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Disclosure: None. This article was originally published at Insider Monkey.
