Is XRX Stock A Buy or Sell?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value 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 investors think of Xerox Holdings Corporation (NYSE:XRX).

Is XRX stock a buy? Xerox Holdings Corporation (NYSE:XRX) has experienced a decrease in enthusiasm from smart money of late. Xerox Holdings Corporation (NYSE:XRX) was in 27 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 44. There were 28 hedge funds in our database with XRX holdings at the end of September. Our calculations also showed that XRX isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here).

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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 let’s check out the recent hedge fund action encompassing Xerox Holdings Corporation (NYSE:XRX).

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

At Q4’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards XRX over the last 22 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

More specifically, Icahn Capital LP was the largest shareholder of Xerox Holdings Corporation (NYSE:XRX), with a stake worth $667.2 million reported as of the end of December. Trailing Icahn Capital LP was Arrowstreet Capital, which amassed a stake valued at $114.1 million. D E Shaw, Citadel Investment Group, and AQR Capital Management 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 Icahn Capital LP allocated the biggest weight to Xerox Holdings Corporation (NYSE:XRX), around 3.33% of its 13F portfolio. Falcon Edge Capital is also relatively very bullish on the stock, dishing out 1.22 percent of its 13F equity portfolio to XRX.

Due to the fact that Xerox Holdings Corporation (NYSE:XRX) has witnessed falling interest from hedge fund managers, it’s safe to say that there were a few funds that decided to sell off their positions entirely last quarter. It’s worth mentioning that Manoj Jain and Sohit Khurana’s Maso Capital said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, valued at about $2.4 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund sold off about $2 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Xerox Holdings Corporation (NYSE:XRX) but similarly valued. These stocks are Spirit Realty Capital Inc (NYSE:SRC), Graphic Packaging Holding Company (NYSE:GPK), China Biologic Products Holdings Inc (NASDAQ:CBPO), Qurate Retail, Inc. (NASDAQ:QRTEA), WPX Energy Inc (NYSE:WPX), JetBlue Airways Corporation (NASDAQ:JBLU), and Kinsale Capital Group, Inc. (NASDAQ:KNSL). This group of stocks’ market caps resemble XRX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $443 million. That figure was $1011 million in XRX’s case. Qurate Retail, Inc. (NASDAQ:QRTEA) is the most popular stock in this table. On the other hand China Biologic Products Holdings Inc (NASDAQ:CBPO) is the least popular one with only 16 bullish hedge fund positions. Xerox Holdings Corporation (NYSE:XRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XRX is 49.9. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately XRX wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on XRX were disappointed as the stock returned 10.3% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

Follow Insider Monkey on Twitter