Does XPEL Inc. (NASDAQ:XPEL) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Is XPEL Inc. (NASDAQ:XPEL) the right investment to pursue these days? Hedge funds are taking a bullish view. The number of long hedge fund bets inched up by 2 recently. Our calculations also showed that XPEL isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
Israel Englander of Millennium Management
Let’s view the new hedge fund action regarding XPEL Inc. (NASDAQ:XPEL).
What does smart money think about XPEL Inc. (NASDAQ:XPEL)?
At the end of the third quarter, a total of 2 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2 from the second quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in XPEL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in XPEL Inc. (NASDAQ:XPEL) was held by Iszo Capital, which reported holding $16.8 million worth of stock at the end of September. It was followed by Millennium Management with a $1 million position.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Iszo Capital, managed by Brian Sheehy, initiated the largest position in XPEL Inc. (NASDAQ:XPEL). Iszo Capital had $16.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1 million position during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as XPEL Inc. (NASDAQ:XPEL) but similarly valued. We will take a look at Computer Programs & Systems, Inc. (NASDAQ:CPSI), Select Interior Concepts, Inc. (NASDAQ:SIC), Willis Lease Finance Corporation (NASDAQ:WLFC), and Altisource Portfolio Solutions S.A. (NASDAQ:ASPS). This group of stocks’ market valuations resemble XPEL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPSI | 12 | 18542 | 0 |
| SIC | 14 | 61557 | 5 |
| WLFC | 4 | 26710 | 1 |
| ASPS | 9 | 50131 | 0 |
| Average | 9.75 | 39235 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $18 million in XPEL’s case. Select Interior Concepts, Inc. (NASDAQ:SIC) is the most popular stock in this table. On the other hand Willis Lease Finance Corporation (NASDAQ:WLFC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks XPEL Inc. (NASDAQ:XPEL) is even less popular than WLFC. Hedge funds clearly dropped the ball on XPEL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. A small number of hedge funds were also right about betting on XPEL as the stock returned 35.3% during the fourth quarter (through 11/22) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.