Is Xilinx, Inc. (XLNX) Going to Burn These Hedge Funds?

Is Xilinx, Inc. (NASDAQ:XLNX) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Xilinx, Inc. (NASDAQ:XLNX) has experienced an increase in hedge fund interest of late. Xilinx, Inc. (NASDAQ:XLNX) was in 59 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 66. There were 57 hedge funds in our database with XLNX holdings at the end of March. Our calculations also showed that XLNX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Nathaniel August of Mangrove Partners

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 let’s take a look at the recent hedge fund action encompassing Xilinx, Inc. (NASDAQ:XLNX).

Do Hedge Funds Think XLNX Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 59 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the first quarter of 2020. By comparison, 47 hedge funds held shares or bullish call options in XLNX 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.

Of the funds tracked by Insider Monkey, 0, managed by Israel Englander, holds the number one position in Xilinx, Inc. (NASDAQ:XLNX). Millennium Management has a $327.7 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is 0, led by David Goel and Paul Ferri, holding a $303.7 million position; 3.3% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions include Matthew Halbower’s 0, Joshua Friedman and Mitchell Julis’s 0 and Dmitry Balyasny’s 0. In terms of the portfolio weights assigned to each position Sand Grove Capital Partners allocated the biggest weight to Xilinx, Inc. (NASDAQ:XLNX), around 12.8% of its 13F portfolio. Hunting Hill Global Capital is also relatively very bullish on the stock, earmarking 11.16 percent of its 13F equity portfolio to XLNX.

As one would reasonably expect, some big names were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, created the biggest position in Xilinx, Inc. (NASDAQ:XLNX). Alyeska Investment Group had $44.2 million invested in the company at the end of the quarter. Matthew Moskey and Friedrich Schulte-Hillen’s Athos Capital also initiated a $26.7 million position during the quarter. The other funds with brand new XLNX positions are Nathaniel August’s Mangrove Partners, John Osterweis’s Osterweis Capital Management, and Wayne Yu’s BCK Capital.

Let’s check out hedge fund activity in other stocks similar to Xilinx, Inc. (NASDAQ:XLNX). These stocks are TransDigm Group Incorporated (NYSE:TDG), Xcel Energy Inc (NASDAQ:XEL), Brown-Forman Corporation (NYSE:BF), Alcon Inc. (NYSE:ALC), Republic Services, Inc. (NYSE:RSG), Otis Worldwide Corporation (NYSE:OTIS), and SBA Communications Corporation (NASDAQ:SBAC). This group of stocks’ market caps are similar to XLNX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $2262 million. That figure was $4162 million in XLNX’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand Xcel Energy Inc (NASDAQ:XEL) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Xilinx, Inc. (NASDAQ:XLNX) is more popular among hedge funds. Our overall hedge fund sentiment score for XLNX is 83.8. 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 returned 25.7% in 2021 through September 27th but still managed to beat the market by 6.2 percentage points. Hedge funds were also right about betting on XLNX as the stock returned 10.4% since the end of June (through 9/27) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.