Hedge Funds Are Crazy About Xinyuan Real Estate Co., Ltd. (ADR) (XIN)

Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) investors should be aware of an increase in activity from the world’s largest hedge funds of late.

In the eyes of most investors, hedge funds are assumed to be slow, outdated financial tools of years past. While there are greater than 8000 funds in operation today, we look at the bigwigs of this club, close to 450 funds. It is widely believed that this group controls the lion’s share of the hedge fund industry’s total asset base, and by watching their top investments, we have unsheathed a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced 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 23.3 percentage points in 8 months (see the details here).

Equally as important, positive insider trading activity is another way to parse down the financial markets. Just as you’d expect, there are plenty of reasons for an upper level exec to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this method if piggybackers know what to do (learn more here).

Now, we’re going to take a glance at the key action encompassing Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN).

How have hedgies been trading Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN)?

At the end of the first quarter, a total of 5 of the hedge funds we track were long in this stock, a change of 25% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly.

Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the largest position in Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN). Renaissance Technologies has a $8.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Two Sigma Advisors, managed by John Overdeck and David Siegel, which held a $1.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.

As aggregate interest increased, some big names were leading the bulls’ herd. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the most valuable call position in Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN). PEAK6 Capital Management had less than $1 million invested in the company at the end of the quarter.

What have insiders been doing with Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN)?

Bullish insider trading is best served when the company in question has seen transactions within the past half-year. Over the latest half-year time period, Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN). These stocks are Gafisa SA (ADR) (NYSE:GFA), AV Homes Inc (NASDAQ:AVHI), Hovnanian Enterprises, Inc. (NYSE:HOV), M/I Homes Inc (NYSE:MHO), and Beazer Homes USA, Inc. (NYSE:BZH). This group of stocks are in the residential construction industry and their market caps match XIN’s market cap.

With the returns demonstrated by our research, everyday investors should always keep an eye on hedge fund and insider trading activity, and Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) applies perfectly to this mantra.

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