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Should Value Investors Buy Pacific Biosciences of California (PACB) Stock?

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Alex Smith
·4 min read
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Baron Discovery Fund recently published its third-quarter commentary – a copy of which can be downloaded here. During the third quarter of 2020, the Baron Discovery Fund returned 18.83% (institutional shares). This was 11.67% better than the Russell 2000 Growth Index, the Fund’s primary benchmark index. You should check out Baron Discovery Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Baron Discovery Fund highlighted a few stocks and Pacific Biosciences Of California Inc. (NASDAQ:PACB) is one of them. Pacific Biosciences Of California Inc. (NASDAQ:PACB) is a biotechnology company. Year-to-date, Pacific Biosciences Of California Inc. (NASDAQ:PACB) stock gained 250.2% and on December 2nd it had a closing price of $18.00. Here is what Baron Discovery Fund said:

"Pacific Biosciences of California, Inc. (“PacBio”) offers a differentiated long-read DNA sequencing platform for genetic analysis. We initiated a position in August when the company did a $100 million secondary share offering with proceeds to be used to support the company’s organic growth. Its proprietary SMRT cells and chemistries enable longer strands to be read at a time, which can capture lengthy genomic variations that may be missed by short-read sequencers such as those made by market leader Illumina. PacBio’s “HiFi” reads are based on circular consensus sequencing, which not only enable long reads, but also achieve high-read accuracy (a critical deficiency in early long-read technologies). The total addressable market for long-read analyzers is estimated at $2.5 billion by 2022, and with just single-digit penetration, we believe PacBio has room for significant growth as it commercially executes on its innovative platform. Cost has historically been a barrier to adoption, but the company has been investing in significantly improving throughput and cost per sample. In September 2015, it announced the Sequel System with SMRT Cell 1M, which improved throughput 7-fold relative to the legacy RS system. Then, in April 2019, it introduced the Sequel II system with SMRT Cell 8M to improve the throughput a further 8-fold (15-fold when taking into consideration chemistry and software upgrades released in the fourth quarter of 2019). Furthermore, PacBio recently appointed Christian Henry as its new CEO. Christian was previously Chief Commercial Officer at Illumina, and we believe his expertise can help guide PacBio to a commercial inflection point. We are excited to be able to own a company of this quality that is still a small cap."

Countries With Highest Medical Research Spending
Countries With Highest Medical Research Spending

Likoper/Shutterstock.com

In Q2 2020, the number of bullish hedge fund positions on Pacific Biosciences Of California Inc. (NASDAQ:PACB) stock increased by about 22% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in PACB's growth potential. Our calculations showed that Pacific Biosciences Of California Inc. (NASDAQ:PACB) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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. You can subscribe to our free daily newsletter on our website:

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