Is EXAS A Good Stock To Buy According To Hedge Funds?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards EXACT Sciences Corporation (NASDAQ:EXAS).

Is EXAS a good stock to buy? The smart money was in a bearish mood. The number of bullish hedge fund positions were cut by 9 lately. EXACT Sciences Corporation (NASDAQ:EXAS) was in 34 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 43. Our calculations also showed that EXAS isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

To the average investor there are many formulas stock market investors have at their disposal to appraise their stock investments. Two of the less utilized formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best money managers can trounce their index-focused peers by a healthy margin (see the details here).

Ricky Sandler of Eminence Capital

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 15 best blue chip stocks to buy 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. With all of this in mind let’s take a look at the recent 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 third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EXAS over the last 21 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Is EXAS A Good Stock To Buy?

More specifically, Viking Global was the largest shareholder of EXACT Sciences Corporation (NASDAQ:EXAS), with a stake worth $305.5 million reported as of the end of September. Trailing Viking Global was Zevenbergen Capital Investments, which amassed a stake valued at $213.1 million. Baker Bros. Advisors, Eminence Capital, and Millennium 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 Zevenbergen Capital Investments allocated the biggest weight to EXACT Sciences Corporation (NASDAQ:EXAS), around 4.28% of its 13F portfolio. RiverPark Advisors is also relatively very bullish on the stock, dishing out 3.52 percent of its 13F equity portfolio to EXAS.

Seeing as EXACT Sciences Corporation (NASDAQ:EXAS) has faced bearish sentiment from the smart money, logic holds that there were a few hedgies who sold off their positions entirely heading into Q4. At the top of the heap, Principal Global Investors’s Columbus Circle Investors cut the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth an estimated $24.1 million in stock. Steve Cohen’s fund, Point72 Asset Management, also cut its stock, about $17.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 9 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as EXACT Sciences Corporation (NASDAQ:EXAS) but similarly valued. We will take a look at Bio-Rad Laboratories, Inc. (NYSE:BIO), Synchrony Financial (NYSE:SYF), XPeng Inc. (NYSE:XPEV), DISH Network Corp. (NASDAQ:DISH), Broadridge Financial Solutions, Inc. (NYSE:BR), Fifth Third Bancorp (NASDAQ:FITB), and Expeditors International of Washington (NASDAQ:EXPD). All of these 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
BIO 48 1164966 -6
SYF 46 1962420 0
XPEV 26 214330 26
DISH 60 1594539 6
BR 33 244445 9
FITB 30 358412 -2
EXPD 31 528714 -2
Average 39.1 866832 4.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.1 hedge funds with bullish positions and the average amount invested in these stocks was $867 million. That figure was $1113 million in EXAS’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand XPeng Inc. (NYSE:XPEV) is the least popular one with only 26 bullish hedge fund positions. EXACT Sciences Corporation (NASDAQ:EXAS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EXAS is 31.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on EXAS as the stock returned 34.4% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.

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