Is XLRN Stock A Buy or Sell?

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Acceleron Pharma Inc (NASDAQ:XLRN) based on that data.

Is XLRN stock a buy? Hedge fund interest in Acceleron Pharma Inc (NASDAQ:XLRN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that XLRN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare XLRN to other stocks including Commerce Bancshares, Inc. (NASDAQ:CBSH), OneConnect Financial Technology Co., Ltd. (NYSE:OCFT), and Churchill Downs Incorporated (NASDAQ:CHDN) 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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

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At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to take a glance at the key hedge fund action encompassing Acceleron Pharma Inc (NASDAQ:XLRN).

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

At fourth quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards XLRN over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Acceleron Pharma Inc (NASDAQ:XLRN) was held by Farallon Capital, which reported holding $332.6 million worth of stock at the end of December. It was followed by Alkeon Capital Management with a $219.9 million position. Other investors bullish on the company included Avoro Capital Advisors (venBio Select Advisor), Darwin Global Management, and Holocene Advisors. In terms of the portfolio weights assigned to each position Darwin Global Management allocated the biggest weight to Acceleron Pharma Inc (NASDAQ:XLRN), around 33.5% of its 13F portfolio. Foresite Capital is also relatively very bullish on the stock, dishing out 16.15 percent of its 13F equity portfolio to XLRN.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Acceleron Pharma Inc (NASDAQ:XLRN) but similarly valued. We will take a look at Commerce Bancshares, Inc. (NASDAQ:CBSH), OneConnect Financial Technology Co., Ltd. (NYSE:OCFT), Churchill Downs Incorporated (NASDAQ:CHDN), Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), Americold Realty Trust (NYSE:COLD), Diamondback Energy Inc (NASDAQ:FANG), and Woodward Inc (NASDAQ:WWD). This group of stocks’ market values are closest to XLRN’s market value.

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As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $357 million. That figure was $1344 million in XLRN’s case. Diamondback Energy Inc (NASDAQ:FANG) is the most popular stock in this table. On the other hand Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) is the least popular one with only 4 bullish hedge fund positions. Acceleron Pharma Inc (NASDAQ:XLRN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XLRN is 76.3. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on XLRN, though not to the same extent, as the stock returned 7.9% since Q4 (through April 1st) and outperformed the market as well.

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