World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Adaptive Biotechnologies Corporation (NASDAQ:ADPT) was in 38 hedge funds’ portfolios at the end of the second quarter of 2019. ADPT has experienced an increase in hedge fund sentiment of late. There were 0 hedge funds in our database with ADPT positions at the end of the previous quarter. Our calculations also showed that ADPT isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the new hedge fund action surrounding Adaptive Biotechnologies Corporation (NASDAQ:ADPT).
How are hedge funds trading Adaptive Biotechnologies Corporation (NASDAQ:ADPT)?
At Q2’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ADPT over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Adaptive Biotechnologies Corporation (NASDAQ:ADPT) was held by Viking Global, which reported holding $1855 million worth of stock at the end of March. It was followed by Matrix Capital Management with a $837.1 million position. Other investors bullish on the company included Senator Investment Group, Baker Bros. Advisors, and Millennium Management.
As one would reasonably expect, some big names have jumped into Adaptive Biotechnologies Corporation (NASDAQ:ADPT) headfirst. Viking Global, managed by Andreas Halvorsen, created the most outsized position in Adaptive Biotechnologies Corporation (NASDAQ:ADPT). Viking Global had $1.855 billion invested in the company at the end of the quarter. David Goel and Paul Ferri’s Matrix Capital Management also initiated a $837.1 million position during the quarter. The other funds with new positions in the stock are Doug Silverman and Alexander Klabin’s Senator Investment Group, Julian Baker and Felix Baker’s Baker Bros. Advisors, and Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks similar to Adaptive Biotechnologies Corporation (NASDAQ:ADPT). These stocks are Algonquin Power & Utilities Corp. (NYSE:AQN), Tallgrass Energy, LP (NYSE:TGE), AGCO Corporation (NYSE:AGCO), and Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (NYSE:PAC). This group of stocks’ market caps are closest to ADPT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AQN | 9 | 63964 | -3 |
| TGE | 13 | 47232 | 2 |
| AGCO | 25 | 227411 | -1 |
| PAC | 4 | 105017 | -3 |
| Average | 12.75 | 110906 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. That figure was $3181 million in ADPT’s case. AGCO Corporation (NYSE:AGCO) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (NYSE:PAC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Adaptive Biotechnologies Corporation (NASDAQ:ADPT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ADPT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ADPT were disappointed as the stock returned -36% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.