The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded EXACT Sciences Corporation (NASDAQ:EXAS) and determine whether the smart money was really smart about this stock.
Is EXACT Sciences Corporation (NASDAQ:EXAS) the right investment to pursue these days? Investors who are in the know were becoming more confident. The number of bullish hedge fund bets went up by 9 recently. EXACT Sciences Corporation (NASDAQ:EXAS) was in 43 hedge funds' portfolios at the end of June. The all time high for this statistics is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EXAS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 34 hedge funds in our database with EXAS positions at the end of the first quarter. Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ricky Sandler of Eminence Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind let's take a peek at the latest hedge fund action surrounding EXACT Sciences Corporation (NASDAQ:EXAS).
How are hedge funds trading EXACT Sciences Corporation (NASDAQ:EXAS)?
At the end of the second quarter, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from the first quarter of 2020. On the other hand, there were a total of 32 hedge funds with a bullish position in EXAS a year ago. So, let's see 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 EXACT Sciences Corporation (NASDAQ:EXAS), with a stake worth $189.8 million reported as of the end of September. Trailing Viking Global was Zevenbergen Capital Investments, which amassed a stake valued at $172.6 million. Baker Bros. Advisors, Eminence Capital, and Citadel Investment Group 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 Zevenbergen Capital Investments allocated the biggest weight to EXACT Sciences Corporation (NASDAQ:EXAS), around 4.12% of its 13F portfolio. Tavio Capital is also relatively very bullish on the stock, designating 3.96 percent of its 13F equity portfolio to EXAS.
As industrywide interest jumped, some big names were leading the bulls' herd. Point72 Asset Management, managed by Steve Cohen, established the biggest position in EXACT Sciences Corporation (NASDAQ:EXAS). Point72 Asset Management had $17.4 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners also made a $15.3 million investment in the stock during the quarter. The other funds with brand new EXAS positions are Christopher James's Partner Fund Management, Brian Ashford-Russell and Tim Woolley's Polar Capital, and Donald Sussman's Paloma Partners.
Let's also examine hedge fund activity in other stocks similar to EXACT Sciences Corporation (NASDAQ:EXAS). These stocks are Pinterest, Inc. (NYSE:PINS), Avangrid, Inc. (NYSE:AGR), Burlington Stores Inc (NYSE:BURL), Synchrony Financial (NYSE:SYF), FMC Corporation (NYSE:FMC), Galapagos NV (NASDAQ:GLPG), and Martin Marietta Materials, Inc. (NYSE:MLM). All of these stocks' market caps are similar to EXAS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PINS,53,1067483,15 AGR,18,132976,0 BURL,38,1475273,-2 SYF,46,1563925,9 FMC,42,548601,3 GLPG,13,151392,-2 MLM,51,1593527,7 Average,37.3,933311,4.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $933 million. That figure was $993 million in EXAS's case. Pinterest, Inc. (NYSE:PINS) is the most popular stock in this table. On the other hand Galapagos NV (NASDAQ:GLPG) is the least popular one with only 13 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 77.5. 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and beat the market by 23.2 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 -13.4% 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.