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Did Hedge Funds Make The Right Call On 10x Genomics, Inc. (TXG) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of 10x Genomics, Inc. (NASDAQ:TXG) based on that data and determine whether they were really smart about the stock.

10x Genomics, Inc. (NASDAQ:TXG) was in 20 hedge funds’ portfolios at the end of March. TXG has experienced an increase in enthusiasm from smart money in recent months. There were 12 hedge funds in our database with TXG holdings at the end of the previous quarter. Our calculations also showed that TXG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. 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 we are checking out this under-the-radar lithium stock. 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. With all of this in mind we’re going to take a glance at the key hedge fund action regarding 10x Genomics, Inc. (NASDAQ:TXG).

How are hedge funds trading 10x Genomics, Inc. (NASDAQ:TXG)?

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TXG over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Is TXG A Good Stock To Buy?

More specifically, JS Capital was the largest shareholder of 10x Genomics, Inc. (NASDAQ:TXG), with a stake worth $88.1 million reported as of the end of September. Trailing JS Capital was Point72 Asset Management, which amassed a stake valued at $15.9 million. Perceptive Advisors, Alyeska Investment Group, and OrbiMed Advisors 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 JS Capital allocated the biggest weight to 10x Genomics, Inc. (NASDAQ:TXG), around 11.08% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, setting aside 1.73 percent of its 13F equity portfolio to TXG.

With a general bullishness amongst the heavyweights, specific money managers have jumped into 10x Genomics, Inc. (NASDAQ:TXG) headfirst. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in 10x Genomics, Inc. (NASDAQ:TXG). Point72 Asset Management had $15.9 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $6.7 million position during the quarter. The other funds with new positions in the stock are Samuel Isaly’s OrbiMed Advisors, Arsani William’s Logos Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s go over hedge fund activity in other stocks similar to 10x Genomics, Inc. (NASDAQ:TXG). We will take a look at PulteGroup, Inc. (NYSE:PHM), GCI Liberty, Inc. (NASDAQ:GLIBA), BanColombia S.A. (NYSE:CIB), and Formula One Group (NASDAQ:FWONA). This group of stocks’ market values are closest to TXG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PHM 36 465706 2
GLIBA 49 1833581 2
CIB 11 86861 -3
FWONA 17 257605 -5
Average 28.25 660938 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $661 million. That figure was $167 million in TXG’s case. GCI Liberty, Inc. (NASDAQ:GLIBA) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 11 bullish hedge fund positions. 10x Genomics, Inc. (NASDAQ:TXG) is not the least popular stock in this group but hedge fund interest is still below average. 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 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on TXG as the stock returned 53.7% since the end of March and outperformed the market by an even larger margin.

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