A day after posting gains of 18%, shares of EXCO Resources Inc (NYSE:XCO) have given back about half of those gains today, falling by 9.70%, with the losses coming in the last hour of the day’s trading session. The onshore oil and natural gas company announced this morning that will focus the majority of it capital expenditures in the first half of 2016 on its Haynesville Shale resources in East Texas. That follows a similar pronouncement earlier this year that it would do likewise through the end of this year, mostly shutting down its Appalachia and Eagle Ford Shale operations until prices improve. EXCO defaulted earlier this year, dipping to as low as $0.50 per share in the process, and completed a distressed exchange last month. Will the company’s narrowed focus bring improved results? Let’s see what elite money managers thought of the company’s prospects during the third quarter.
Is EXCO Resources Inc (NYSE:XCO) a buy right now? Prominent investors are getting less optimistic. The number of long hedge fund bets went down by 3 lately. At the end of this article we will also compare EXCO Resources to other stocks including LSI Industries, Inc. (NASDAQ:LYTS), Sequenom, Inc. (NASDAQ:SQNM), and Charter Financial Corp (NASDAQ:CHFN) to get a better sense of its popularity.
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In the financial world there are a lot of formulas shareholders employ to size up publicly traded companies. A couple of the most innovative formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top money managers can trounce the S&P 500 by a superb margin (see the details here).
With all of this in mind, we’re going to take a look at the latest action surrounding EXCO Resources Inc (NYSE:XCO).
How have hedgies been trading EXCO Resources Inc (NYSE:XCO)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 20% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Wilbur Ross’ Invesco Private Capital (WL Ross) has the largest position in EXCO Resources Inc (NYSE:XCO), worth close to $38.3 million, corresponding to 7.9% of its total 13F portfolio. The second-largest stake is held by Howard Marks’ Oaktree Capital Management, with a $33.9 million position; 0.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions encompass Prem Watsa’s Fairfax Financial Holdings, Stephen C. Freidheim’s Cyrus Capital Partners, and Renaissance Technologies.
Seeing as EXCO Resources Inc (NYSE:XCO) has faced falling interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds who sold off their positions entirely last quarter. Intriguingly, Zach Schreiber’s Point State Capital sold off the biggest investment of all the hedgies watched by Insider Monkey, valued at close to $1.2 million in stock. David Costen Haley’s fund, HBK Investments, also sold off its stock, about $0.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to EXCO Resources Inc (NYSE:XCO). These stocks are LSI Industries, Inc. (NASDAQ:LYTS), Sequenom, Inc. (NASDAQ:SQNM), Charter Financial Corp (NASDAQ:CHFN), and Blue Bird Copr (NASDAQ:BLBD). All of these stocks’ market caps are closest to EXCO Resources ‘s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYTS | 10 | 28214 | 3 |
| SQNM | 11 | 47936 | -2 |
| CHFN | 9 | 31061 | 0 |
| BLBD | 7 | 54339 | -4 |
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $93 million in EXCO Resources’ case. Sequenom, Inc. (NASDAQ:SQNM) is the most popular stock in this table. On the other hand Blue Bird Copr (NASDAQ:BLBD) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks EXCO Resources Inc (NYSE:XCO) is more popular among hedge funds and has more invested in it. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in further detail and potentially include it in your portfolio.
