We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Ginkgo Bioworks Holdings Inc. (NYSE:DNA) and determine whether hedge funds skillfully traded this stock.
Is Ginkgo Bioworks Holdings Inc. (NYSE:DNA) the right investment to pursue these days? Prominent investors were betting on the stock. The number of long hedge fund bets moved up by 32 recently. Ginkgo Bioworks Holdings Inc. (NYSE:DNA) was in 32 hedge funds’ portfolios at the end of September. Our calculations also showed that DNA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Ole Andreas Halvorsen of Viking Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a look at the fresh hedge fund action encompassing Ginkgo Bioworks Holdings Inc. (NYSE:DNA).
Do Hedge Funds Think DNA Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in DNA 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 Ginkgo Bioworks Holdings Inc. (NYSE:DNA), with a stake worth $3511.1 million reported as of the end of September. Trailing Viking Global was Senator Investment Group, which amassed a stake valued at $912.2 million. Anchorage Advisors, ARK Investment Management, and Casdin 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 Anchorage Advisors allocated the biggest weight to Ginkgo Bioworks Holdings Inc. (NYSE:DNA), around 20.15% of its 13F portfolio. Senator Investment Group is also relatively very bullish on the stock, earmarking 15.61 percent of its 13F equity portfolio to DNA.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Viking Global, managed by Andreas Halvorsen, assembled the most outsized position in Ginkgo Bioworks Holdings Inc. (NYSE:DNA). Viking Global had $3.5111 billion invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin’s Senator Investment Group also made a $912.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Kevin Michael Ulrich and Anthony Davis’s Anchorage Advisors, Catherine D. Wood’s ARK Investment Management, and Eli Casdin’s Casdin Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ginkgo Bioworks Holdings Inc. (NYSE:DNA) but similarly valued. We will take a look at Royal Caribbean Cruises Ltd. (NYSE:RCL), Magna International Inc. (NYSE:MGA), CNH Industrial NV (NYSE:CNHI), Extra Space Storage, Inc. (NYSE:EXR), Northern Trust Corporation (NASDAQ:NTRS), XP Inc. (NASDAQ:XP), and Vulcan Materials Company (NYSE:VMC). All of these stocks’ market caps resemble DNA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RCL | 35 | 575404 | -7 |
| MGA | 29 | 444703 | -10 |
| CNHI | 25 | 909259 | 1 |
| EXR | 27 | 405036 | 6 |
| NTRS | 34 | 535076 | 2 |
| XP | 28 | 674196 | 3 |
| VMC | 43 | 1923351 | 0 |
| Average | 31.6 | 781004 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $781 million. That figure was $5696 million in DNA’s case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 25 bullish hedge fund positions. Ginkgo Bioworks Holdings Inc. (NYSE:DNA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DNA is 41.1. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, DNA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DNA were disappointed as the stock returned -48.4% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
