With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Xerox Holdings Corporation (NYSE:XRX).
Is XRX a good stock to buy now? The best stock pickers were becoming more confident. The number of bullish hedge fund bets went up by 3 lately. Xerox Holdings Corporation (NYSE:XRX) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that XRX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 27 hedge funds in our database with XRX holdings at the end of December.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
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. Keeping this in mind we’re going to take a look at the key hedge fund action regarding Xerox Holdings Corporation (NYSE:XRX).
Do Hedge Funds Think XRX Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in XRX over the last 23 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Carl Icahn’s Icahn Capital LP has the number one position in Xerox Holdings Corporation (NYSE:XRX), worth close to $698.2 million, amounting to 2.9% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $116.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to Xerox Holdings Corporation (NYSE:XRX), around 2.93% of its 13F portfolio. 0 is also relatively very bullish on the stock, dishing out 1.36 percent of its 13F equity portfolio to XRX.
As industrywide interest jumped, some big names have been driving this bullishness. Tudor Investment Corp, managed by Paul Tudor Jones, assembled the largest position in Xerox Holdings Corporation (NYSE:XRX). Tudor Investment Corp had $8.9 million invested in the company at the end of the quarter. Karim Abbadi and Edward McBride’s Centiva Capital also made a $1.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Joe Huber’s Huber Capital Management, and Peter Algert’s Algert Global.
Let’s go over hedge fund activity in other stocks similar to Xerox Holdings Corporation (NYSE:XRX). We will take a look at SelectQuote, Inc. (NYSE:SLQT), Magnite Inc. (NASDAQ:MGNI), Allegro MicroSystems, Inc. (NASDAQ:ALGM), FTI Consulting, Inc. (NYSE:FCN), Stantec Inc. (NYSE:STN), Fisker Inc. (NYSE:FSR), and Sinopec Shanghai Petrochemical Co. (NYSE:SHI). This group of stocks’ market valuations are similar to XRX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SLQT | 17 | 185055 | -2 |
| MGNI | 25 | 335746 | -4 |
| ALGM | 17 | 90381 | 1 |
| FCN | 24 | 520173 | -1 |
| STN | 9 | 39824 | 2 |
| FSR | 22 | 337954 | 4 |
| SHI | 4 | 14885 | -1 |
| Average | 16.9 | 217717 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $1045 million in XRX’s case. Magnite Inc. (NASDAQ:MGNI) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Co. (NYSE:SHI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Xerox Holdings Corporation (NYSE:XRX) is more popular among hedge funds. Our overall hedge fund sentiment score for XRX is 78.5. 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. 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 22.8% in 2021 through July 2nd and still beat the market by 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 0.1% since the end of the first quarter (through 7/2) 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 since 2019.
Follow Xerox Holdings Corp (NYSE:XRX)
Follow Xerox Holdings Corp (NYSE:XRX)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- 15 Biggest Petrochemical Companies In The World
- 10 Best Sporting Goods Stocks To Buy Now
Disclosure: None. This article was originally published at Insider Monkey.
