Hedge Funds Are Selling Pacific Biosciences of California, Inc. (PACB)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Pacific Biosciences of California, Inc. (NASDAQ:PACB) based on those filings.

Is Pacific Biosciences of California, Inc. (NASDAQ:PACB) worth your attention right now? Prominent investors are turning less bullish. The number of long hedge fund positions decreased by 5 recently. Our calculations also showed that PACB 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 21st century investor’s toolkit there are a lot of tools stock traders have at their disposal to evaluate publicly traded companies. A couple of the less utilized tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce their index-focused peers by a superb amount (see the details here).


Larry Robbins of Glenview Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the recent hedge fund action regarding Pacific Biosciences of California, Inc. (NASDAQ:PACB).

What have hedge funds been doing with Pacific Biosciences of California, Inc. (NASDAQ:PACB)?

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in PACB a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Water Island Capital held the most valuable stake in Pacific Biosciences of California, Inc. (NASDAQ:PACB), which was worth $16.7 million at the end of the third quarter. On the second spot was Polar Capital which amassed $10.9 million worth of shares. Glenview Capital, Farallon Capital, and Camber Capital Management 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 Water Island Capital allocated the biggest weight to Pacific Biosciences of California, Inc. (NASDAQ:PACB), around 1.2% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, setting aside 0.92 percent of its 13F equity portfolio to PACB.

Due to the fact that Pacific Biosciences of California, Inc. (NASDAQ:PACB) has witnessed falling interest from the aggregate hedge fund industry, we can see that there was a specific group of fund managers that elected to cut their full holdings by the end of the first quarter. Interestingly, Noam Gottesman’s GLG Partners said goodbye to the biggest stake of the 750 funds followed by Insider Monkey, valued at an estimated $4 million in stock, and Andre F. Perold’s HighVista Strategies was right behind this move, as the fund dumped about $1.9 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pacific Biosciences of California, Inc. (NASDAQ:PACB) but similarly valued. These stocks are Mesoblast Limited (NASDAQ:MESO), Boingo Wireless Inc (NASDAQ:WIFI), Dorian LPG Ltd (NYSE:LPG), and Winmark Corporation (NASDAQ:WINA). This group of stocks’ market values are similar to PACB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MESO 4 1302 3
WIFI 16 149530 4
LPG 17 107158 -5
WINA 11 76758 -1
Average 12 83687 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $75 million in PACB’s case. Dorian LPG Ltd (NYSE:LPG) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Pacific Biosciences of California, Inc. (NASDAQ:PACB) is more popular among hedge funds. 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. Unfortunately PACB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PACB were disappointed as the stock returned 16.3% during the second quarter (through June 22nd) 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.