Is Pacific Biosciences of California (NASDAQ:PACB) the right pick for your portfolio? Investors who are in the know are getting more optimistic. The number of bullish hedge fund bets inched up by 2 in recent months.
To most investors, hedge funds are seen as worthless, old financial vehicles of yesteryear. While there are over 8000 funds trading today, we hone in on the elite of this group, around 450 funds. It is estimated that this group oversees the lion’s share of all hedge funds’ total capital, and by paying attention to their best investments, we have uncovered a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as key, positive insider trading sentiment is another way to break down the marketplace. There are a number of incentives for an executive to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this method if “monkeys” understand where to look (learn more here).
Keeping this in mind, let’s take a gander at the latest action surrounding Pacific Biosciences of California (NASDAQ:PACB).
Hedge fund activity in Pacific Biosciences of California (NASDAQ:PACB)
At year’s end, a total of 7 of the hedge funds we track were bullish in this stock, a change of 40% from the third quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably.
According to our comprehensive database, James E. Flynn’s Deerfield Management had the most valuable position in Pacific Biosciences of California (NASDAQ:PACB), worth close to $8.3 million, accounting for 0.5% of its total 13F portfolio. The second largest stake is held by Maverick Capital, managed by Lee Ainslie, which held a $6 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism include Mark Broach’s Manatuck Hill Partners, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Manatuck Hill Partners, managed by Mark Broach, initiated the most outsized position in Pacific Biosciences of California (NASDAQ:PACB). Manatuck Hill Partners had 0.9 million invested in the company at the end of the quarter. Joseph Edelman’s Perceptive Advisors also initiated a $0.1 million position during the quarter.
How are insiders trading Pacific Biosciences of California (NASDAQ:PACB)?
Insider buying is best served when the company in question has seen transactions within the past six months. Over the latest 180-day time period, Pacific Biosciences of California (NASDAQ:PACB) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Pacific Biosciences of California (NASDAQ:PACB). These stocks are ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), Chelsea Therapeutics International Ltd. (NASDAQ:CHTP), Geron Corporation (NASDAQ:GERN), ImmunoCellular Therapeutics Ltd (NYSEAMEX:IMUC), and Targacept , Inc. (NASDAQ:TRGT). All of these stocks are in the biotechnology industry and their market caps match PACB’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|ZIOPHARM Oncology Inc. (NASDAQ:ZIOP)||6||1||0|
|Chelsea Therapeutics International Ltd. (NASDAQ:CHTP)||3||0||1|
|Geron Corporation (NASDAQ:GERN)||7||1||1|
|ImmunoCellular Therapeutics Ltd (NYSEAMEX:IMUC)||2||0||1|
|Targacept , Inc. (NASDAQ:TRGT)||10||3||0|
With the returns shown by our time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Pacific Biosciences of California (NASDAQ:PACB) is an important part of this process.