Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged during the first quarter. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 40% and 25% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the first 5 months of 2019 and outperformed the broader market benchmark by 6.6 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Xencor Inc (NASDAQ:XNCR) was in 16 hedge funds’ portfolios at the end of the first quarter of 2019. XNCR investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. There were 13 hedge funds in our database with XNCR holdings at the end of the previous quarter. Our calculations also showed that XNCR isn’t among the 30 most popular stocks among hedge funds.
At the moment there are a multitude of signals investors can use to grade stocks. Some of the most useful signals are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best investment managers can beat the S&P 500 by a very impressive margin (see the details here).
We’re going to take a gander at the latest hedge fund action encompassing Xencor Inc (NASDAQ:XNCR).
How have hedgies been trading Xencor Inc (NASDAQ:XNCR)?
Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in XNCR a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeremy Green’s Redmile Group has the number one position in Xencor Inc (NASDAQ:XNCR), worth close to $94.3 million, comprising 2.8% of its total 13F portfolio. Sitting at the No. 2 spot is Oleg Nodelman of EcoR1 Capital, with a $64 million position; the fund has 5.9% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Julian Baker and Felix Baker’s Baker Bros. Advisors, Steve Cohen’s Point72 Asset Management and Noam Gottesman’s GLG Partners.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Xencor Inc (NASDAQ:XNCR) headfirst. GLG Partners, managed by Noam Gottesman, initiated the most valuable position in Xencor Inc (NASDAQ:XNCR). GLG Partners had $2.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $1.1 million position during the quarter. The following funds were also among the new XNCR investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Jim Simons’s Renaissance Technologies, and Michael S. Weiss and Lindsay A. Rosenwald’s Opus Point Partners Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Xencor Inc (NASDAQ:XNCR) but similarly valued. We will take a look at FGL Holdings (NYSE:FG), Allakos Inc. (NASDAQ:ALLK), Deswell Industries, Inc. (NASDAQ:DSW), and NGL Energy Partners LP (NYSE:NGL). This group of stocks’ market valuations are similar to XNCR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FG | 23 | 183387 | -6 |
| ALLK | 9 | 148939 | -1 |
| DSW | 19 | 138500 | -8 |
| NGL | 4 | 12350 | 0 |
| Average | 13.75 | 120794 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $190 million in XNCR’s case. FGL Holdings (NYSE:FG) is the most popular stock in this table. On the other hand NGL Energy Partners LP (NYSE:NGL) is the least popular one with only 4 bullish hedge fund positions. Xencor Inc (NASDAQ:XNCR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on XNCR as the stock returned 11.6% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
