Is Xerox Corporation (NYSE:XRX) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Xerox Corporation (NYSE:XRX) investors should be aware of an increase in enthusiasm from smart money lately. XRX was in 33 hedge funds’ portfolios at the end of the third quarter of 2015. There were 30 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 Textron Inc. (NYSE:TXT), MGM Resorts International (NYSE:MGM), and Goldcorp Inc. (USA) (NYSE:GG) to get a better sense of its popularity.
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To most market participants, hedge funds are viewed as slow, old financial tools of years past. While there are more than an 8000 funds trading today, We hone in on the moguls of this club, approximately 700 funds. These investment experts have their hands on bulk of the hedge fund industry’s total asset base, and by monitoring their highest performing picks, Insider Monkey has spotted a number of investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, let’s check out the new action surrounding Xerox Corporation (NYSE:XRX).
What does the smart money think about Xerox Corporation (NYSE:XRX)?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 10% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Xerox Corporation (NYSE:XRX), worth an estimated $89.5 million and comprising 0.2% of its 13F portfolio. On AQR Capital Management’s heels is Winton Capital Management, managed by David Harding, which holds a $81.2 million position; 0.6% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism include Daniel S. Och’s OZ Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Brian Jackelow’s SAB Capital Management.
Consequently, key hedge funds were leading the bulls’ herd. OZ Management, managed by Daniel S. Och, assembled the biggest call position in Xerox Corporation (NYSE:XRX). According to its latest 13F filing, the fund had $74.1 million invested in the company at the end of the quarter. Brian Jackelow’s SAB Capital Management also initiated a $43.7 million position during the quarter. The following funds were also among the new XRX investors: Daniel S. Och’s OZ Management, Israel Englander’s Millennium Management, and Neil Chriss’s Hutchin Hill Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Xerox Corporation (NYSE:XRX) but similarly valued. We will take a look at Textron Inc. (NYSE:TXT), MGM Resorts International (NYSE:MGM), Goldcorp Inc. (USA) (NYSE:GG), and Grifols SA, Barcelona (NASDAQ:GRFS). This group of stocks’ market values resemble XRX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TXT | 26 | 688242 | -7 |
| MGM | 49 | 1914535 | -9 |
| GG | 29 | 871283 | 5 |
| GRFS | 14 | 648378 | 1 |
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $1.03 billion. XRX managed to attract only $548 million of the hedgies’ money. MGM Resorts International (NYSE:MGM) is the most popular stock in this table, while Grifols SA, Barcelona (NASDAQ:GRFS) is the least popular one with only 14 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 MGM might be a better candidate to consider a long position.
