Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Twist Bioscience Corporation (NASDAQ:TWST).
Twist Bioscience Corporation (NASDAQ:TWST) has seen an increase in hedge fund interest of late. Twist Bioscience Corporation (NASDAQ:TWST) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 23 hedge funds in our database with TWST positions at the end of the fourth quarter. Our calculations also showed that TWST isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. 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 homepage. Keeping this in mind let’s go over the fresh hedge fund action regarding Twist Bioscience Corporation (NASDAQ:TWST).
Do Hedge Funds Think TWST Is A Good Stock To Buy Now?
At the end of March, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in TWST a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Twist Bioscience Corporation (NASDAQ:TWST) was held by ARK Investment Management, which reported holding $748.8 million worth of stock at the end of December. It was followed by Casdin Capital with a $123.9 million position. Other investors bullish on the company included Tao Capital, D E Shaw, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Tao Capital allocated the biggest weight to Twist Bioscience Corporation (NASDAQ:TWST), around 29.65% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, dishing out 3.69 percent of its 13F equity portfolio to TWST.
Consequently, some big names have jumped into Twist Bioscience Corporation (NASDAQ:TWST) headfirst. Brevan Howard, managed by Alan Howard, established the biggest position in Twist Bioscience Corporation (NASDAQ:TWST). Brevan Howard had $2.8 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.8 million investment in the stock during the quarter. The following funds were also among the new TWST investors: Michael Gelband’s ExodusPoint Capital, Leonard A. Potter’s Wildcat Capital Management, and Jonathan Soros’s JS Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Twist Bioscience Corporation (NASDAQ:TWST) but similarly valued. We will take a look at Olin Corporation (NYSE:OLN), KT Corporation (NYSE:KT), Brixmor Property Group Inc (NYSE:BRX), Ardagh Group S.A. (NYSE:ARD), Nordstrom, Inc. (NYSE:JWN), Virtu Financial Inc (NASDAQ:VIRT), and Halozyme Therapeutics, Inc. (NASDAQ:HALO). This group of stocks’ market caps resemble TWST’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $342 million. That figure was $1115 million in TWST’s case. Olin Corporation (NYSE:OLN) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 11 bullish hedge fund positions. Twist Bioscience Corporation (NASDAQ:TWST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TWST is 64.3. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately TWST wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TWST were disappointed as the stock returned -9.5% since the end of March (through 7/16) 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 many of these stocks already outperformed the market since 2019.
Disclosure: None. This article was originally published at Insider Monkey.