Hedge Funds Can’t Stop Buying Twist Bioscience Corporation (TWST)

The latest 13F reporting period has come and gone, and 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. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Twist Bioscience Corporation (NASDAQ:TWST) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Twist Bioscience Corporation (NASDAQ:TWST) has seen an increase in support from the world’s most elite money managers recently. Twist Bioscience Corporation (NASDAQ:TWST) was in 19 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TWST 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.

At the moment there are a large number of metrics stock market investors use to evaluate their stock investments. A duo of the most useful metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can trounce the S&P 500 by a very impressive amount (see the details here).

Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

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 are checking out this junior gold mining stock and 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 to get excerpts of these letters in your inbox. Now let’s go over the recent hedge fund action surrounding Twist Bioscience Corporation (NASDAQ:TWST).

How have hedgies been trading Twist Bioscience Corporation (NASDAQ:TWST)?

At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TWST over the last 20 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Nicholas J. Pritzker’s Tao Capital has the most valuable position in Twist Bioscience Corporation (NASDAQ:TWST), worth close to $59.8 million, amounting to 23.6% of its total 13F portfolio. On Tao Capital’s heels is Casdin Capital, managed by Eli Casdin, which holds a $45.3 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass Anand Parekh’s Alyeska Investment Group, Jeremy Green’s Redmile Group and Bihua Chen’s Cormorant Asset Management. In terms of the portfolio weights assigned to each position Tao Capital allocated the biggest weight to Twist Bioscience Corporation (NASDAQ:TWST), around 23.63% of its 13F portfolio. Iron Triangle Partners is also relatively very bullish on the stock, setting aside 4.8 percent of its 13F equity portfolio to TWST.

Consequently, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in Twist Bioscience Corporation (NASDAQ:TWST). Marshall Wace LLP had $3.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $2.6 million position during the quarter. The other funds with brand new TWST positions are Kenneth Tropin’s Graham Capital Management and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Twist Bioscience Corporation (NASDAQ:TWST) but similarly valued. These stocks are Covetrus, Inc. (NASDAQ:CVET), ChampionX Corporation (NYSE:CHX), First Interstate Bancsystem Inc (NASDAQ:FIBK), Uniqure NV (NASDAQ:QURE), Barnes Group Inc. (NYSE:B), Extended Stay America Inc (NASDAQ:STAY), and Nu Skin Enterprises, Inc. (NYSE:NUS). This group of stocks’ market caps are closest to TWST’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVET 24 210441 2
CHX 30 452274 11
FIBK 12 20747 5
QURE 49 595039 5
B 19 39170 8
STAY 30 353720 12
NUS 25 240249 7
Average 27 273091 7.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $273 million. That figure was $318 million in TWST’s case. Uniqure NV (NASDAQ:QURE) is the most popular stock in this table. On the other hand First Interstate Bancsystem Inc (NASDAQ:FIBK) is the least popular one with only 12 bullish hedge fund positions. Twist Bioscience Corporation (NASDAQ:TWST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TWST is 47.5. 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. 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on TWST as the stock returned 67.7% in the third quarter and outperformed the market by an even larger margin.

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