Should You Avoid XO Group Inc (XOXO)?

The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards XO Group Inc (NYSE:XOXO).

Is XO Group Inc (NYSE:XOXO) a sound investment now? Money managers are really taking a bearish view. The number of bullish hedge fund positions contracted by 1 recently. XOXO was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. There were 16 hedge funds in our database with XOXO holdings at the end of the previous quarter. At the end of this article we will also compare XOXO to other stocks including General Communication, Inc. (NASDAQ:GNCMA), CSW Industrials Inc (NASDAQ:CSWI), and Aegean Marine Petroleum Network Inc. (NYSE:ANW) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with XO Group Inc (NYSE:XOXO)?

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 6% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in XOXO heading into this year. So, let’s examine 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, Renaissance Technologies, one of the biggest hedge funds in the world, holds the biggest position in XO Group Inc (NYSE:XOXO). Renaissance Technologies has a $27.1 million position in the stock. The second largest stake is held by John W. Rogers’ Ariel Investments which holds a $22.7 million position. Some other members of the smart money with similar optimism consist of David Park’s Headlands Capital, Wallace Weitz’s Wallace R. Weitz & Co. and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.