Ixia (NASDAQ:XXIA) ‘s stock has gained more than 18% since the beginning of the year and hit a fresh 52-week high today, as the stock has gained another 5% following positive coverage initiated by DA Davidson. The brokerage initiated coverage on the stock with a ‘Buy’ rating and a price target of $17 on Ixia (NASDAQ:XXIA), representing considerable upside of about 36% from yesterday’s closing price. Ixia posted a beat in its first quarter earnings report, released last month reporting EPS of $0.12, 20% higher than estimates of $0.10. It also posted revenue of $120.96 million, beating the expectations by $3.51 million.
We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 142%, nearly 2.5 times greater returns than the S&P 500 during the same period (see more details).
We track hedge fund and insider sentiment in order to understand the true potential of stocks going forward. We believe that hedge fund sentiment reveals the true nature of a stock, being powered by vast and well funded research and analytical teams. In the case of Ixia, hedge fund sentiment was strongly positive during the first quarter, as the number of hedge funds with holdings in the stock went up to 14, an increase from 10 at the end of 2014, representing an increase of 40%.
On the other hand, insider sentiment was negative, as there were no insider purchases in the first quarter, but many insiders sold some of their positions. Negative insider sentiment however should not be considered as strong a signal as insider buying, as there are multiple reasons why an insider could sell some of their position that have nothing to do with the expected performance of the stock. As mentioned, the stock has done quite well year-to-date and hedge fund sentiment is positive.
With all of this in mind, let’s go over the latest action surrounding Ixia (NASDAQ:XXIA).
How have hedgies been trading Ixia (NASDAQ:XXIA)?
At the end of Q1, the number of hedge fund positions in the stock went up by 40% when compared to the end of 2014. Many hedge fund managers increased their position substantially in the stock. Eric Bannasch‘s Cadian Capital holds the largest position in Ixia with shares worth $21.5 million. Ixia also accounts for 0.6% of Cadian Capital’s 13F portfolio. Following Cadian Capital is North Run Capital led by Thomas Ellis and Todd Hammer. North Run Capital’s holding in Ixia is worth $17 million and accounts for 1.9% of its 13F portfolio. Other hedge funds with a bullish outlook on the stock include Lee Munder’s Lee Munder Capital Group, Clint Carlson‘s Carlson Capital and Israel Englander‘s Millennium Management.
When there is a strongly positive hedge fund sentiment on a stock, one would expect a lot of hedge funds to initiate a position in the stock. Clint Carlson’s Carlson Capital initiated its position in Ixia’s stock with a $9.7 million investment in the first quarter. The next big new investment in the stock was by Peter Muller’s PDT Partners with an investment of $1 million in the stock. Other hedge funds with new positions in the stock includes Chao Ku’s Nine Chapters Capital Management, Joseph A. Jolson’s Harvest Capital Strategies, and John Overdeck and David Siegel’s Two Sigma Advisors.
Despite the fact that inside sentiment has been negative on the Ixia stock, the strong performance of the stock since the beginning of the year and the strongly positive hedge fund and analyst sentiment makes us believe that this stock should be bought. We recommend to buy this stock.
Disclosure: None
