Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Xenon Pharmaceuticals Inc (NASDAQ:XENE) to find out whether there were any major changes in hedge funds’ views.
Xenon Pharmaceuticals Inc (NASDAQ:XENE) was in 35 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. XENE has experienced an increase in enthusiasm from smart money in recent months. There were 28 hedge funds in our database with XENE positions at the end of the second quarter. Our calculations also showed that XENE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Richard Driehaus of Driehaus Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a glance at the new hedge fund action surrounding Xenon Pharmaceuticals Inc (NASDAQ:XENE).
Do Hedge Funds Think XENE Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in XENE over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in Xenon Pharmaceuticals Inc (NASDAQ:XENE), which was worth $55.8 million at the end of the third quarter. On the second spot was Perceptive Advisors which amassed $30.9 million worth of shares. Biotechnology Value Fund / BVF Inc, Driehaus Capital, and Adage 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 Ghost Tree Capital allocated the biggest weight to Xenon Pharmaceuticals Inc (NASDAQ:XENE), around 3.53% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, setting aside 2.49 percent of its 13F equity portfolio to XENE.
As aggregate interest increased, some big names were breaking ground themselves. Great Point Partners, managed by Jeffrey Jay and David Kroin, created the most valuable position in Xenon Pharmaceuticals Inc (NASDAQ:XENE). Great Point Partners had $10.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $4.1 million position during the quarter. The other funds with new positions in the stock are Prashanth Jayaram’s Tri Locum Partners, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.
Let’s check out hedge fund activity in other stocks similar to Xenon Pharmaceuticals Inc (NASDAQ:XENE). We will take a look at Peapack-Gladstone Financial Corp (NASDAQ:PGC), Glatfelter Corp (NYSE:GLT), Adagene Inc. (NASDAQ:ADAG), Newtek Business Services Corp (NASDAQ:NEWT), GAN Limited (NASDAQ:GAN), Sabine Royalty Trust (NYSE:SBR), and TORM plc (NASDAQ:TRMD). This group of stocks’ market caps resemble XENE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PGC | 14 | 64110 | 0 |
| GLT | 10 | 53605 | -2 |
| ADAG | 5 | 10207 | -2 |
| NEWT | 5 | 7827 | 1 |
| GAN | 16 | 55519 | 1 |
| SBR | 4 | 17749 | -1 |
| TRMD | 6 | 417582 | 0 |
| Average | 8.6 | 89514 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $323 million in XENE’s case. GAN Limited (NASDAQ:GAN) is the most popular stock in this table. On the other hand Sabine Royalty Trust (NYSE:SBR) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Xenon Pharmaceuticals Inc (NASDAQ:XENE) is more popular among hedge funds. Our overall hedge fund sentiment score for XENE is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on XENE as the stock returned 74.7% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Xenon Pharmaceuticals Inc. (NASDAQ:XENE)
Follow Xenon Pharmaceuticals Inc. (NASDAQ:XENE)
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Disclosure: None. This article was originally published at Insider Monkey.
