The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded XPO Logistics Inc (NYSE:XPO) based on those filings.
XPO Logistics Inc (NYSE:XPO) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. XPO Logistics Inc (NYSE:XPO) was in 57 hedge funds’ portfolios at the end of June. The all time high for this statistic is 47. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that XPO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
William Gray of Orbis Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to take a glance at the new hedge fund action surrounding XPO Logistics Inc (NYSE:XPO).
Do Hedge Funds Think XPO Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 57 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards XPO over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in XPO Logistics Inc (NYSE:XPO) was held by 0, which reported holding $1566.4 million worth of stock at the end of June. It was followed by Lyrical Asset Management with a $392.4 million position. Other investors bullish on the company included MFN Partners, Empyrean Capital Partners, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Lansing Management allocated the biggest weight to XPO Logistics Inc (NYSE:XPO), around 15.05% of its 13F portfolio. Orbis Investment Management is also relatively very bullish on the stock, earmarking 9.9 percent of its 13F equity portfolio to XPO.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, initiated the most valuable position in XPO Logistics Inc (NYSE:XPO). Empyrean Capital Partners had $109.5 million invested in the company at the end of the quarter. Jeffrey Gates’s Gates Capital Management also initiated a $49 million position during the quarter. The following funds were also among the new XPO investors: Joseph Samuels’s Islet Management, Jeffrey Talpins’s Element Capital Management, and Guy Shahar’s DSAM Partners.
Let’s also examine hedge fund activity in other stocks similar to XPO Logistics Inc (NYSE:XPO). We will take a look at NICE Ltd (NASDAQ:NICE), Westinghouse Air Brake Technologies Corporation (NYSE:WAB), Textron Inc. (NYSE:TXT), Discovery Inc. (NASDAQ:DISCA), Enel Americas S.A. (NYSE:ENIA), argenx SE (NASDAQ:ARGX), and BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). All of these stocks’ market caps match XPO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NICE | 22 | 1035023 | -11 |
| WAB | 46 | 2823758 | 6 |
| TXT | 22 | 962305 | 1 |
| DISCA | 44 | 587867 | -4 |
| ENIA | 7 | 47642 | -4 |
| ARGX | 27 | 1454196 | 0 |
| BMRN | 44 | 1324516 | 1 |
| Average | 30.3 | 1176472 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1176 million. That figure was $3138 million in XPO’s case. Westinghouse Air Brake Technologies Corporation (NYSE:WAB) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks XPO Logistics Inc (NYSE:XPO) is more popular among hedge funds. Our overall hedge fund sentiment score for XPO is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 26.3% in 2021 through October 29th but still managed to beat the market by 2.3 percentage points. Hedge funds were also right about betting on XPO as the stock returned 5.4% since the end of June (through 10/29) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
