Is PACB Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Pacific Biosciences of California, Inc. (NASDAQ:PACB).

Is PACB stock a buy? The best stock pickers were turning less bullish. The number of long hedge fund bets went down by 2 lately. Pacific Biosciences of California, Inc. (NASDAQ:PACB) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 25. Our calculations also showed that PACB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 25 hedge funds in our database with PACB positions at the end of the third quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Felix Baker of Baker Bros.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to check out the latest hedge fund action surrounding Pacific Biosciences of California, Inc. (NASDAQ:PACB).

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

At Q4’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PACB over the last 22 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

More specifically, ARK Investment Management was the largest shareholder of Pacific Biosciences of California, Inc. (NASDAQ:PACB), with a stake worth $739.4 million reported as of the end of December. Trailing ARK Investment Management was SB Management, which amassed a stake valued at $238.4 million. 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 Casdin Capital allocated the biggest weight to Pacific Biosciences of California, Inc. (NASDAQ:PACB), around 3.84% of its 13F portfolio. Iron Triangle Partners is also relatively very bullish on the stock, dishing out 2.69 percent of its 13F equity portfolio to PACB.

Seeing as Pacific Biosciences of California, Inc. (NASDAQ:PACB) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies that decided to sell off their full holdings heading into Q1. At the top of the heap, Brian Ashford-Russell and Tim Woolley’s Polar Capital sold off the largest stake of the “upper crust” of funds followed by Insider Monkey, worth an estimated $54 million in stock. Stephen DuBois’s fund, Camber Capital Management, also said goodbye to its stock, about $43.5 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds heading into Q1.

Let’s check out hedge fund activity in other stocks similar to Pacific Biosciences of California, Inc. (NASDAQ:PACB). These stocks are LiveRamp Holdings, Inc. (NYSE:RAMP), IDACORP Inc (NYSE:IDA), NCR Corporation (NYSE:NCR), SailPoint Technologies Holdings, Inc. (NYSE:SAIL), Curtiss-Wright Corp. (NYSE:CW), TFI International Inc. (NYSE:TFII), and BOK Financial Corporation (NASDAQ:BOKF). This group of stocks’ market valuations resemble PACB’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $371 million. That figure was $1484 million in PACB’s case. NCR Corporation (NYSE:NCR) is the most popular stock in this table. On the other hand TFI International Inc. (NYSE:TFII) is the least popular one with only 10 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. Our overall hedge fund sentiment score for PACB is 60.1. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on PACB as the stock returned 14.1% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

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