Do Hedge Funds Love Adaptive Biotechnologies Corporation (ADPT)?

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 Adaptive Biotechnologies Corporation (NASDAQ:ADPT) and determine whether the smart money was really smart about this stock.

Adaptive Biotechnologies Corporation (NASDAQ:ADPT) investors should pay attention to an increase in hedge fund interest of late. Adaptive Biotechnologies Corporation (NASDAQ:ADPT) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistics is 38. Our calculations also showed that ADPT 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).

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

In the 21st century investor’s toolkit there are tons of metrics investors have at their disposal to grade publicly traded companies. Some of the less known metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outpace the broader indices by a very impressive margin (see the details here).

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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let’s analyze the latest hedge fund action encompassing Adaptive Biotechnologies Corporation (NASDAQ:ADPT).

Hedge fund activity in Adaptive Biotechnologies Corporation (NASDAQ:ADPT)

At the end of June, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 56% from the previous quarter. By comparison, 38 hedge funds held shares or bullish call options in ADPT a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Among these funds, Viking Global held the most valuable stake in Adaptive Biotechnologies Corporation (NASDAQ:ADPT), which was worth $1620.4 million at the end of the third quarter. On the second spot was Matrix Capital Management which amassed $731.3 million worth of shares. Senator Investment Group, Tiger Management, and Zevenbergen Capital Investments 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 Tiger Management allocated the biggest weight to Adaptive Biotechnologies Corporation (NASDAQ:ADPT), around 14.89% of its 13F portfolio. Matrix Capital Management is also relatively very bullish on the stock, dishing out 11.4 percent of its 13F equity portfolio to ADPT.

Now, specific money managers have jumped into Adaptive Biotechnologies Corporation (NASDAQ:ADPT) headfirst. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, assembled the most outsized position in Adaptive Biotechnologies Corporation (NASDAQ:ADPT). Healthcor Management LP had $16.7 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $4.1 million position during the quarter. The other funds with new positions in the stock are Jacob Doft’s Highline Capital Management, Krishen Sud’s Sivik Global Healthcare, and Richard Chilton’s Chilton Investment Company.

Let’s now take a look at hedge fund activity in other stocks similar to Adaptive Biotechnologies Corporation (NASDAQ:ADPT). These stocks are Zai Lab Limited (NASDAQ:ZLAB), Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), Ares Capital Corporation (NASDAQ:ARCC), National Retail Properties, Inc. (NYSE:NNN), Lumentum Holdings Inc (NASDAQ:LITE), Smartsheet Inc. (NYSE:SMAR), and SYNNEX Corporation (NYSE:SNX). This group of stocks’ market valuations resemble ADPT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ZLAB 27 416774 5
JAZZ 34 1164286 5
ARCC 19 150961 -7
NNN 17 86331 -2
LITE 42 678388 8
SMAR 47 2024773 6
SNX 24 502344 0
Average 30 717694 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $718 million. That figure was $2690 million in ADPT’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand National Retail Properties, Inc. (NYSE:NNN) is the least popular one with only 17 bullish hedge fund positions. Adaptive Biotechnologies Corporation (NASDAQ:ADPT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ADPT is 50.4. 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 negative signal and 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately ADPT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ADPT investors were disappointed as the stock returned -0.2% since Q2 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 most of these stocks already outperformed the market in 2020.

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