Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards XP Inc. (NASDAQ:XP).
XP Inc. (NASDAQ:XP) has experienced an increase in enthusiasm from smart money recently. XP Inc. (NASDAQ:XP) was in 28 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. There were 25 hedge funds in our database with XP holdings at the end of June. Our calculations also showed that XP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to go over the new hedge fund action regarding XP Inc. (NASDAQ:XP).
Lee Ainslie of Maverick Capital
Do Hedge Funds Think XP Is A Good Stock To Buy Now?
At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards XP over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in XP Inc. (NASDAQ:XP) was held by Alkeon Capital Management, which reported holding $171 million worth of stock at the end of September. It was followed by Maverick Capital with a $141.8 million position. Other investors bullish on the company included D1 Capital Partners, Two Creeks Capital Management, and Cartica Management. In terms of the portfolio weights assigned to each position Cartica Management allocated the biggest weight to XP Inc. (NASDAQ:XP), around 7.48% of its 13F portfolio. ThornTree Capital Partners is also relatively very bullish on the stock, dishing out 3.49 percent of its 13F equity portfolio to XP.
Now, key money managers have jumped into XP Inc. (NASDAQ:XP) headfirst. D1 Capital Partners, managed by Daniel Sundheim, initiated the largest position in XP Inc. (NASDAQ:XP). D1 Capital Partners had $66.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $26.1 million investment in the stock during the quarter. The following funds were also among the new XP investors: Robert Pohly’s Samlyn Capital, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s go over hedge fund activity in other stocks similar to XP Inc. (NASDAQ:XP). We will take a look at Vulcan Materials Company (NYSE:VMC), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Dover Corporation (NYSE:DOV), Zillow Group Inc (NASDAQ:Z), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Xylem Inc (NYSE:XYL), and Hormel Foods Corporation (NYSE:HRL). This group of stocks’ market caps resemble XP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VMC | 43 | 1923351 | 0 |
| ALNY | 40 | 1030395 | 7 |
| DOV | 32 | 351286 | 3 |
| Z | 67 | 4251493 | -9 |
| MPWR | 28 | 799034 | -6 |
| XYL | 22 | 821321 | -1 |
| HRL | 29 | 476824 | 5 |
| Average | 37.3 | 1379101 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $1379 million. That figure was $674 million in XP’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Xylem Inc (NYSE:XYL) is the least popular one with only 22 bullish hedge fund positions. XP Inc. (NASDAQ:XP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for XP is 43.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately XP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); XP investors were disappointed as the stock returned -25.5% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Xp Inc. (NASDAQ:XP)
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Disclosure: None. This article was originally published at Insider Monkey.
