In this article we will check out the progression of hedge fund sentiment towards Xperi Corporation (NASDAQ:XPER) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Xperi Corporation (NASDAQ:XPER) a safe investment right now? Money managers are selling. The number of bullish hedge fund positions fell by 3 in recent months. Our calculations also showed that XPER isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the key hedge fund action encompassing Xperi Corporation (NASDAQ:XPER).
What does smart money think about Xperi Corporation (NASDAQ:XPER)?
At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in XPER a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Xperi Corporation (NASDAQ:XPER), with a stake worth $36.8 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $13.5 million. Beryl Capital Management, Arrowstreet Capital, and Harvey Partners 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 Harvey Partners allocated the biggest weight to Xperi Corporation (NASDAQ:XPER), around 5.02% of its 13F portfolio. Beryl Capital Management is also relatively very bullish on the stock, earmarking 2.44 percent of its 13F equity portfolio to XPER.
Because Xperi Corporation (NASDAQ:XPER) has experienced bearish sentiment from the smart money, it’s easy to see that there exists a select few funds that elected to cut their full holdings in the first quarter. Intriguingly, Donald Sussman’s Paloma Partners said goodbye to the largest position of all the hedgies followed by Insider Monkey, valued at about $2.1 million in stock. Minhua Zhang’s fund, Weld Capital Management, also sold off its stock, about $1.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Xperi Corporation (NASDAQ:XPER) but similarly valued. These stocks are Republic Bancorp, Inc. KY (NASDAQ:RBCAA), GreenSky, Inc. (NASDAQ:GSKY), Associated Capital Group, Inc. (NYSE:AC), and Amphastar Pharmaceuticals Inc (NASDAQ:AMPH). All of these stocks’ market caps resemble XPER’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RBCAA | 5 | 8845 | -3 |
| GSKY | 9 | 14686 | -3 |
| AC | 6 | 53890 | 0 |
| AMPH | 6 | 19619 | 0 |
| Average | 6.5 | 24260 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $109 million in XPER’s case. GreenSky, Inc. (NASDAQ:GSKY) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Xperi Corporation (NASDAQ:XPER) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. Unfortunately XPER wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on XPER were disappointed as the stock returned -1.7% during the second quarter (through June 17th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
