Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Xencor Inc (NASDAQ:XNCR) .
Is Xencor Inc (NASDAQ:XNCR) an exceptional stock to buy now? The best stock pickers seem to be in a bullish mood. The number of bullish hedge fund bets that are revealed through the 13F filings increased by two last quarter. In this way, 17 funds tracked by Insider Monkey held long positions in Xenocor at the end of September. At the end of this article we will also compare XNCR to other stocks including Civitas Solutions Inc (NYSE:CIVI), Orthofix International NV (NASDAQ:OFIX), and American Railcar Industries, Inc. (NASDAQ:ARII) to get a better sense of its popularity.
Follow Xencor Inc (NASDAQ:XNCR)
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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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With all of this in mind, let’s take a peek at the fresh action regarding Xencor Inc (NASDAQ:XNCR).
How are hedge funds trading Xencor Inc (NASDAQ:XNCR)?
Heading into the fourth quarter of 2016, 17 funds tracked by Insider Monkey held long positions in Xencor Inc (NASDAQ:XNCR) at the end of September, up by 13% from the end of June. On the other hand, there were a total of 15 hedge funds with a bullish position in XNCR at the beginning of this year. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Deerfield Management, led by James E. Flynn, holds the number one position in Xencor Inc (NASDAQ:XNCR). Deerfield Management has a $54.1 million position in the stock, comprising 2.5% of its 13F portfolio. The second most bullish fund is Joseph Edelman’s Perceptive Advisors, which holds a $36.6 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism contain Julian Baker and Felix Baker’s Baker Bros. Advisors, Samuel Isaly’s OrbiMed Advisors, and Daniel Gold’s QVT Financial. 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.
As one would reasonably expect, specific money managers have jumped into Xencor Inc (NASDAQ:XNCR) headfirst. Richard Driehaus’ Driehaus Capital assembled the most outsized position in Xencor Inc (NASDAQ:XNCR). Driehaus Capital had $2.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $1.2 million position during the third quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, John Overdeck and David Siegel’s Two Sigma Advisors, and Drew Cupps’ Cupps Capital Management.
Let’s check out hedge fund activity in other stocks similar to Xencor Inc (NASDAQ:XNCR). We will take a look at Civitas Solutions Inc (NYSE:CIVI), Orthofix International NV (NASDAQ:OFIX), American Railcar Industries, Inc. (NASDAQ:ARII), and Encore Wire Corporation (NASDAQ:WIRE). This group of stocks’ market caps are closest to XNCR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CIVI | 8 | 9503 | 1 |
| OFIX | 23 | 231332 | 3 |
| ARII | 16 | 522934 | 5 |
| WIRE | 12 | 43824 | -4 |
As you can see these stocks had an average of 15 funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $157 million in XNCR’s case. Orthofix International NV (NASDAQ:OFIX) is the most popular stock in this table with 23 investors having reported long positions. On the other hand Civitas Solutions Inc (NYSE:CIVI) is the least popular one with only eight bullish hedge fund positions. Xencor Inc (NASDAQ:XNCR) 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 Orthofix International NV (NASDAQ:OFIX) might be a better candidate to consider taking a long position in.
