At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not Hexcel Corporation (NYSE:HXL) makes for a good investment right now.
Is Hexcel Corporation (NYSE:HXL) going to take off soon? Money managers were becoming less confident. The number of long hedge fund bets decreased by 1 recently. Hexcel Corporation (NYSE:HXL) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that HXL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Louis Bacon Moore of Moore Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a look at the new hedge fund action encompassing Hexcel Corporation (NYSE:HXL).
Do Hedge Funds Think HXL Is A Good Stock To Buy Now?
At the end of September, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HXL over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Balyasny Asset Management held the most valuable stake in Hexcel Corporation (NYSE:HXL), which was worth $21.1 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $18 million worth of shares. Sandbar Asset Management, MFP Investors, 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 Sandbar Asset Management allocated the biggest weight to Hexcel Corporation (NYSE:HXL), around 1.81% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, earmarking 1.36 percent of its 13F equity portfolio to HXL.
Since Hexcel Corporation (NYSE:HXL) has witnessed falling interest from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that slashed their entire stakes by the end of the third quarter. Interestingly, Israel Englander’s Millennium Management dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $41 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund dumped about $5.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 1 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Hexcel Corporation (NYSE:HXL). These stocks are The Goodyear Tire & Rubber Company (NASDAQ:GT), Alkermes Plc (NASDAQ:ALKS), Antero Midstream Corp (NYSE:AM), LHC Group, Inc. (NASDAQ:LHCG), ICU Medical, Inc. (NASDAQ:ICUI), AllianceBernstein Holding LP (NYSE:AB), and Kodiak Sciences Inc (NASDAQ:KOD). This group of stocks’ market values resemble HXL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GT | 37 | 449453 | 4 |
| ALKS | 35 | 977556 | -1 |
| AM | 14 | 87935 | -2 |
| LHCG | 22 | 65204 | 2 |
| ICUI | 31 | 382085 | 4 |
| AB | 8 | 42204 | -1 |
| KOD | 11 | 1490080 | -1 |
| Average | 22.6 | 499217 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $499 million. That figure was $122 million in HXL’s case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand AllianceBernstein Holding LP (NYSE:AB) is the least popular one with only 8 bullish hedge fund positions. Hexcel Corporation (NYSE:HXL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HXL is 47.4. 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 negative signal and 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately HXL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HXL investors were disappointed as the stock returned -12.8% since the end of September (through 12/31) 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 most of these stocks already outperformed the market in 2021.
Follow Hexcel Corp (NYSE:HXL)
Follow Hexcel Corp (NYSE:HXL)
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Disclosure: None. This article was originally published at Insider Monkey.
