In this article we will take a look at whether hedge funds think ExOne Co (NASDAQ:XONE) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is ExOne Co (NASDAQ:XONE) an exceptional stock to buy now? Investors who are in the know are taking a bullish view. The number of long hedge fund positions went up by 1 recently. Our calculations also showed that XONE 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 44 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
David E. Shaw of D.E. Shaw
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the new hedge fund action surrounding ExOne Co (NASDAQ:XONE).
Hedge fund activity in ExOne Co (NASDAQ:XONE)
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards XONE over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in ExOne Co (NASDAQ:XONE), which was worth $0.3 million at the end of the third quarter. On the second spot was Millennium Management which amassed $0.2 million worth of shares. Citadel Investment Group was 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 PEAK6 Capital Management allocated the biggest weight to ExOne Co (NASDAQ:XONE), around 0.0005% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, designating 0.0005 percent of its 13F equity portfolio to XONE.
As aggregate interest increased, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, created the biggest position in ExOne Co (NASDAQ:XONE). Millennium Management had $0.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.1 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ExOne Co (NASDAQ:XONE) but similarly valued. These stocks are Intrepid Potash, Inc. (NYSE:IPI), Fiesta Restaurant Group Inc (NASDAQ:FRGI), 22nd Century Group, Inc (NYSE:XXII), and GasLog Partners LP (NYSE:GLOP). All of these stocks’ market caps match XONE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IPI | 8 | 3665 | -5 |
| FRGI | 12 | 43524 | -2 |
| XXII | 1 | 384 | 0 |
| GLOP | 6 | 4758 | -1 |
| Average | 6.75 | 13083 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $1 million in XONE’s case. Fiesta Restaurant Group Inc (NASDAQ:FRGI) is the most popular stock in this table. On the other hand 22nd Century Group, Inc (NYSE:XXII) is the least popular one with only 1 bullish hedge fund positions. ExOne Co (NASDAQ:XONE) is not the least popular stock in this group but hedge fund interest is still below average. 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on XONE as the stock returned 27.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
