Hedge Funds Never Been Less Bullish On Adaptive Biotechnologies Corporation (ADPT)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted 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 Adaptive Biotechnologies Corporation (NASDAQ:ADPT).

Is Adaptive Biotechnologies Corporation (NASDAQ:ADPT) a superb stock to buy now? Investors who are in the know are in a bearish mood. The number of long hedge fund bets retreated by 4 lately. Our calculations also showed that ADPT 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). ADPT was in 18 hedge funds’ portfolios at the end of March. There were 22 hedge funds in our database with ADPT positions at the end of the previous quarter.

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

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 we’re going to take a look at the recent hedge fund action surrounding Adaptive Biotechnologies Corporation (NASDAQ:ADPT).

How are hedge funds trading Adaptive Biotechnologies Corporation (NASDAQ:ADPT)?

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. By comparison, 0 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 upping their holdings substantially (or already accumulated large positions).

Is ADPT A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the most valuable position in Adaptive Biotechnologies Corporation (NASDAQ:ADPT). Viking Global has a $930.5 million position in the stock, comprising 4.8% of its 13F portfolio. On Viking Global’s heels is David Goel and Paul Ferri of Matrix Capital Management, with a $419.9 million position; 10.7% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions include Doug Silverman and Alexander Klabin’s Senator Investment Group, Julian Robertson’s Tiger Management and Eli Casdin’s Casdin Capital. In terms of the portfolio weights assigned to each position Matrix Capital Management allocated the biggest weight to Adaptive Biotechnologies Corporation (NASDAQ:ADPT), around 10.73% of its 13F portfolio. Tiger Management is also relatively very bullish on the stock, designating 10.41 percent of its 13F equity portfolio to ADPT.

Seeing as Adaptive Biotechnologies Corporation (NASDAQ:ADPT) has witnessed declining sentiment from the smart money, we can see that there were a few hedge funds who sold off their positions entirely last quarter. Intriguingly, Anand Parekh’s Alyeska Investment Group sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at about $15.9 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $12.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 4 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Adaptive Biotechnologies Corporation (NASDAQ:ADPT) but similarly valued. We will take a look at Alaska Air Group, Inc. (NYSE:ALK), Terreno Realty Corporation (NYSE:TRNO), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), and Zai Lab Limited (NASDAQ:ZLAB). This group of stocks’ market valuations match ADPT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALK 27 263441 -12
TRNO 10 26182 -4
BJ 26 156840 4
ZLAB 22 364537 -4
Average 21.25 202750 -4

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $1592 million in ADPT’s case. Alaska Air Group, Inc. (NYSE:ALK) is the most popular stock in this table. On the other hand Terreno Realty Corporation (NYSE:TRNO) is the least popular one with only 10 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 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. A small number of hedge funds were also right about betting on ADPT as the stock returned 65.6% during the second quarter and outperformed the market by an even larger margin.

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