Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first quarter, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first quarter still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Exelixis, Inc. (NASDAQ:EXEL) changed recently.
Hedge fund interest in Exelixis, Inc. (NASDAQ:EXEL) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare EXEL to other stocks including Mobile TeleSystems Public Joint Stock Company. (NYSE:MBT), Zillow Group Inc (NASDAQ:Z), and Tripadvisor Inc (NASDAQ:TRIP) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a glance at the key hedge fund action regarding Exelixis, Inc. (NASDAQ:EXEL).
Hedge fund activity in Exelixis, Inc. (NASDAQ:EXEL)
Heading into the second quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in EXEL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Exelixis, Inc. (NASDAQ:EXEL). AQR Capital Management has a $377.3 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $227.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers that hold long positions comprise Thomas Steyer’s Farallon Capital, Samuel Isaly’s OrbiMed Advisors and Panayotis Takis Sparaggis’s Alkeon Capital Management.
Since Exelixis, Inc. (NASDAQ:EXEL) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds that decided to sell off their entire stakes last quarter. At the top of the heap, Mitchell Blutt’s Consonance Capital Management dumped the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising close to $130.7 million in stock. Kris Jenner, Gordon Bussard, Graham McPhail’s fund, Rock Springs Capital Management, also said goodbye to its stock, about $12.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Exelixis, Inc. (NASDAQ:EXEL). We will take a look at Mobile TeleSystems OJSC (NYSE:MBT), Zillow Group Inc (NASDAQ:Z), Tripadvisor Inc (NASDAQ:TRIP), and Columbia Sportswear Company (NASDAQ:COLM). All of these stocks’ market caps are closest to EXEL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MBT | 13 | 321821 | 1 |
| Z | 33 | 623335 | 10 |
| TRIP | 27 | 1354971 | -2 |
| COLM | 32 | 359364 | 8 |
| Average | 26.25 | 664873 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $665 million. That figure was $788 million in EXEL’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Mobile TeleSystems Public Joint Stock Company. (NYSE:MBT) is the least popular one with only 13 bullish hedge fund positions. Exelixis, Inc. (NASDAQ:EXEL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately EXEL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EXEL investors were disappointed as the stock returned -16.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
