Was The Smart Money Right About EXACT Sciences Corporation (EXAS)?

In this article we will take a look at whether hedge funds think EXACT Sciences Corporation (NASDAQ:EXAS) 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.

Is EXACT Sciences Corporation (NASDAQ:EXAS) a safe investment now? Money managers were taking a bullish view. The number of bullish hedge fund positions went up by 6 lately. EXACT Sciences Corporation (NASDAQ:EXAS) was in 40 hedge funds’ portfolios at the end of December. The all time high for this statistic is 43. Our calculations also showed that EXAS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

At the moment there are several gauges stock market investors employ to assess their stock investments. Two of the best gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can beat the market by a solid margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Glen Kacher of Light Street Capital

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 let’s take a gander at the fresh hedge fund action regarding EXACT Sciences Corporation (NASDAQ:EXAS).

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

Heading into the first quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EXAS over the last 22 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, ARK Investment Management, managed by Catherine D. Wood, holds the biggest position in EXACT Sciences Corporation (NASDAQ:EXAS). ARK Investment Management has a $703.8 million position in the stock, comprising 1.9% of its 13F portfolio. Coming in second is Zevenbergen Capital Investments, led by Nancy Zevenbergen, holding a $240.9 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Eli Casdin’s Casdin Capital, Ricky Sandler’s Eminence Capital and Aaron Cowen’s Suvretta Capital Management. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to EXACT Sciences Corporation (NASDAQ:EXAS), around 8.59% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, earmarking 5.83 percent of its 13F equity portfolio to EXAS.

As aggregate interest increased, some big names have jumped into EXACT Sciences Corporation (NASDAQ:EXAS) headfirst. Casdin Capital, managed by Eli Casdin, established the most valuable position in EXACT Sciences Corporation (NASDAQ:EXAS). Casdin Capital had $196.8 million invested in the company at the end of the quarter. Aaron Cowen’s Suvretta Capital Management also made a $81 million investment in the stock during the quarter. The other funds with new positions in the stock are Kevin Molloy’s Iron Triangle Partners, Glen Kacher’s Light Street Capital, and Principal Global Investors’s Columbus Circle Investors.

Let’s also examine hedge fund activity in other stocks similar to EXACT Sciences Corporation (NASDAQ:EXAS). We will take a look at Teradyne, Inc. (NASDAQ:TER), POSCO (NYSE:PKX), Laboratory Corp. of America Holdings (NYSE:LH), Vulcan Materials Company (NYSE:VMC), Fifth Third Bancorp (NASDAQ:FITB), BioNTech SE (NASDAQ:BNTX), and International Paper Company (NYSE:IP). This group of stocks’ market valuations resemble EXAS’s market valuation.

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As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $801 million. That figure was $1899 million in EXAS’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 10 bullish hedge fund positions. EXACT Sciences Corporation (NASDAQ:EXAS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EXAS is 64.7. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately EXAS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EXAS were disappointed as the stock returned -0.5% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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