Does Xerox Corporation (NYSE:XRX) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on 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 unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Xerox Corporation (NYSE:XRX) investors should be aware of an increase in enthusiasm from smart money of late. XRX was in 32 hedge funds’ portfolios at the end of September. There were 31 hedge funds in our database with XRX holdings at the end of the previous quarter. At the end of this article we will also compare XRX to other stocks including CarMax, Inc (NYSE:KMX), Huaneng Power International Inc (ADR) (NYSE:HNP), and Hanesbrands Inc. (NYSE:HBI) to get a better sense of its popularity.
Follow Xerox Corp (NYSE:XRX)
Follow Xerox Corp (NYSE:XRX)
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.
With all of this in mind, we’re going to take a look at the fresh action surrounding Xerox Corporation (NYSE:XRX).
What have hedge funds been doing with Xerox Corporation (NYSE:XRX)?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 3% from the second quarter of 2016. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Icahn Capital LP, managed by Carl Icahn, holds the number one position in Xerox Corporation (NYSE:XRX). Icahn Capital LP has a $1.00 billion position in the stock, comprising 5.1% of its 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which holds a $138.2 million position. Some other peers that are bullish encompass Anand Parekh’s Alyeska Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’ Renaissance Technologies.
As aggregate interest increased, some big names have jumped into Xerox Corporation (NYSE:XRX) headfirst. BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, assembled the most valuable position in Xerox Corporation (NYSE:XRX). BlueCrest Capital Mgmt. had $6.8 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $2.8 million position during the quarter. The following funds were also among the new XRX investors: Scott Fine and Peter Richards’ Empire Capital Management, Ken Griffin’s Citadel Investment Group, and John A. Levin’s Levin Capital Strategies.
Let’s also examine hedge fund activity in other stocks similar to Xerox Corporation (NYSE:XRX). These stocks are CarMax, Inc (NYSE:KMX), Huaneng Power International Inc (ADR) (NYSE:HNP), Hanesbrands Inc. (NYSE:HBI), and XL Group plc (NYSE:XL). This group of stocks’ market caps match XRX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KMX | 34 | 978977 | 13 |
| HNP | 1 | 6463 | -4 |
| HBI | 25 | 1016621 | -5 |
| XL | 22 | 436854 | 1 |
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $610 million. That figure was $1.5 billion in XRX’s case. CarMax, Inc (NYSE:KMX) is the most popular stock in this table. On the other hand Huaneng Power International Inc (ADR) (NYSE:HNP) is the least popular one with only 1 bullish hedge fund positions. Xerox Corporation (NYSE:XRX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KMX might be a better candidate to consider a long position.
Disclosure: None
