While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding EXACT Sciences Corporation (NASDAQ:EXAS).
Is EXAS stock a buy or sell? EXACT Sciences Corporation (NASDAQ:EXAS) was in 40 hedge funds’ portfolios at the end of December. The all time high for this statistic is 43. EXAS has seen an increase in hedge fund sentiment recently. There were 34 hedge funds in our database with EXAS positions at the end of the third quarter. Our calculations also showed that EXAS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. With all of this in mind we’re going to review the key hedge fund action encompassing EXACT Sciences Corporation (NASDAQ:EXAS).
Do Hedge Funds Think EXAS Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EXAS over the last 22 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, ARK Investment Management was the largest shareholder of EXACT Sciences Corporation (NASDAQ:EXAS), with a stake worth $703.8 million reported as of the end of December. Trailing ARK Investment Management was Zevenbergen Capital Investments, which amassed a stake valued at $240.9 million. Casdin Capital, Eminence Capital, and Suvretta 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 Iron Triangle Partners allocated the biggest weight to EXACT Sciences Corporation (NASDAQ:EXAS), around 8.59% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, earmarking 5.83 percent of its 13F equity portfolio to EXAS.
As industrywide interest jumped, key money managers have jumped into EXACT Sciences Corporation (NASDAQ:EXAS) headfirst. Casdin Capital, managed by Eli Casdin, initiated the biggest position in EXACT Sciences Corporation (NASDAQ:EXAS). Casdin Capital had $196.8 million invested in the company at the end of the quarter. Aaron Cowen’s Suvretta Capital Management also made a $81 million investment in the stock during the quarter. The other funds with new positions in the stock are Kevin Molloy’s Iron Triangle Partners, Glen Kacher’s Light Street Capital, and Principal Global Investors’s Columbus Circle Investors.
Let’s go over hedge fund activity in other stocks similar to EXACT Sciences Corporation (NASDAQ:EXAS). These stocks are Teradyne, Inc. (NASDAQ:TER), POSCO (NYSE:PKX), Laboratory Corp. of America Holdings (NYSE:LH), Vulcan Materials Company (NYSE:VMC), Fifth Third Bancorp (NASDAQ:FITB), BioNTech SE (NASDAQ:BNTX), and International Paper Company (NYSE:IP). This group of stocks’ market caps are closest to EXAS’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 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $801 million. That figure was $1899 million in EXAS’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 10 bullish hedge fund positions. EXACT Sciences Corporation (NASDAQ:EXAS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EXAS is 64.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately EXAS wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on EXAS were disappointed as the stock returned 0.9% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Exact Sciences Corp (NASDAQ:EXAS)
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Disclosure: None. This article was originally published at Insider Monkey.