We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Pacific Biosciences of California, Inc. (NASDAQ:PACB).
Pacific Biosciences of California, Inc. (NASDAQ:PACB) has seen a decrease in hedge fund interest recently. Our calculations also showed that PACB isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman, GLG Partners
We’re going to review the key hedge fund action encompassing Pacific Biosciences of California, Inc. (NASDAQ:PACB).
How have hedgies been trading Pacific Biosciences of California, Inc. (NASDAQ:PACB)?
Heading into the second quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in PACB over the last 15 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, Magnetar Capital held the most valuable stake in Pacific Biosciences of California, Inc. (NASDAQ:PACB), which was worth $59.4 million at the end of the first quarter. On the second spot was Alpine Associates which amassed $43.9 million worth of shares. Moreover, Water Island Capital, Millennium Management, and Citadel Investment Group were also bullish on Pacific Biosciences of California, Inc. (NASDAQ:PACB), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Pacific Biosciences of California, Inc. (NASDAQ:PACB) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedge funds who were dropping their positions entirely heading into Q3. At the top of the heap, Mitchell Blutt’s Consonance Capital Management dumped the largest position of all the hedgies watched by Insider Monkey, worth close to $18.2 million in call options, and Steve Pigott’s Fort Baker Capital Management was right behind this move, as the fund dumped about $3.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to Pacific Biosciences of California, Inc. (NASDAQ:PACB). These stocks are Garrett Motion Inc. (NYSE:GTX), NextGen Healthcare, Inc. (NASDAQ:NXGN), Constellium NV (NYSE:CSTM), and Neenah, Inc. (NYSE:NP). All of these stocks’ market caps are closest to PACB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTX | 19 | 262120 | 6 |
| NXGN | 13 | 31282 | -2 |
| CSTM | 41 | 264118 | 9 |
| NP | 7 | 12403 | 3 |
| Average | 20 | 142481 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $241 million in PACB’s case. Constellium NV (NYSE:CSTM) is the most popular stock in this table. On the other hand Neenah, Inc. (NYSE:NP) is the least popular one with only 7 bullish hedge fund positions. Pacific Biosciences of California, Inc. (NASDAQ:PACB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately PACB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PACB investors were disappointed as the stock returned -5.5% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
