Hedge Funds Are Selling Xerox Holdings Corporation (XRX)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of Xerox Holdings Corporation (NASDAQ:XRX).

Xerox Holdings Corporation (NASDAQ:XRX) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. Xerox Holdings Corporation (NASDAQ:XRX) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistic is 44. There were 30 hedge funds in our database with XRX positions at the end of the first quarter. Our calculations also showed that XRX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Eric Singer of VIEX Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to view the new hedge fund action surrounding Xerox Holdings Corporation (NASDAQ:XRX).

Do Hedge Funds Think XRX Is A Good Stock To Buy Now?

At Q2’s end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in XRX a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

More specifically, 0 was the largest shareholder of Xerox Holdings Corporation (NASDAQ:XRX), with a stake worth $731.5 million reported as of the end of June. Trailing Icahn Capital LP was Mason Capital Management, which amassed a stake valued at $80.5 million. Newbrook Capital Advisors, Arrowstreet Capital, and Two Sigma Advisors 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 Mason Capital Management allocated the biggest weight to Xerox Holdings Corporation (NASDAQ:XRX), around 4.98% of its 13F portfolio. Newbrook Capital Advisors is also relatively very bullish on the stock, dishing out 4.91 percent of its 13F equity portfolio to XRX.

Seeing as Xerox Holdings Corporation (NASDAQ:XRX) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there were a few hedgies who were dropping their positions entirely last quarter. Interestingly, Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $21.9 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also said goodbye to its stock, about $5.7 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Xerox Holdings Corporation (NASDAQ:XRX) but similarly valued. We will take a look at Shake Shack Inc (NYSE:SHAK), UMB Financial Corporation (NASDAQ:UMBF), Seaboard Corporation (NYSE:SEB), Datto Holding Corp. (NYSE:MSP), Avient Corporation (NYSE:AVNT), Terreno Realty Corporation (NYSE:TRNO), and Semtech Corporation (NASDAQ:SMTC). This group of stocks’ market caps are similar to XRX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $662 million. That figure was $1117 million in XRX’s case. Semtech Corporation (NASDAQ:SMTC) is the most popular stock in this table. On the other hand Datto Holding Corp. (NYSE:MSP) is the least popular one with only 12 bullish hedge fund positions. Xerox Holdings Corporation (NASDAQ:XRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XRX is 57.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately XRX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on XRX were disappointed as the stock returned -10.6% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.