Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is XP Inc. (NASDAQ:XP), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
XP Inc. (NASDAQ:XP) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistic is 29. XP has seen an increase in support from the world’s most elite money managers recently. There were 23 hedge funds in our database with XP holdings at the end of March. Our calculations also showed that XP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Lee Ainslie of Maverick Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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 let’s take a gander at the recent hedge fund action encompassing XP Inc. (NASDAQ:XP).
Do Hedge Funds Think XP Is A Good Stock To Buy Now?
At Q2’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in XP a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, 0, managed by Panayotis Takis Sparaggis, holds the number one position in XP Inc. (NASDAQ:XP). Alkeon Capital Management has a $186 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Lee Ainslie of 0, with a $153.8 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions comprise Ryan Pedlow’s 0, Teresa Barger’s 0 and Mark Moore’s 0. In terms of the portfolio weights assigned to each position Cartica Management allocated the biggest weight to XP Inc. (NASDAQ:XP), around 7.58% of its 13F portfolio. ThornTree Capital Partners is also relatively very bullish on the stock, setting aside 5.22 percent of its 13F equity portfolio to XP.
As aggregate interest increased, key money managers have jumped into XP Inc. (NASDAQ:XP) headfirst. Two Creeks Capital Management, managed by Ryan Pedlow, created the most valuable position in XP Inc. (NASDAQ:XP). Two Creeks Capital Management had $50.6 million invested in the company at the end of the quarter. Simon Sadler’s Segantii Capital also made a $5.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Michael Gelband’s ExodusPoint Capital, and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as XP Inc. (NASDAQ:XP) but similarly valued. We will take a look at Northern Trust Corporation (NASDAQ:NTRS), Expedia Group Inc (NASDAQ:EXPE), International Paper Company (NYSE:IP), Baker Hughes Company (NYSE:BKR), AmerisourceBergen Corporation (NYSE:ABC), Splunk Inc (NASDAQ:SPLK), and Canon Inc. (NYSE:CAJ). All of these stocks’ market caps are closest to XP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NTRS | 32 | 499610 | 4 |
| EXPE | 87 | 5922167 | 1 |
| IP | 31 | 209500 | -5 |
| BKR | 40 | 1012638 | -2 |
| ABC | 43 | 1005836 | 0 |
| SPLK | 47 | 1185992 | 6 |
| CAJ | 8 | 53729 | -1 |
| Average | 41.1 | 1412782 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.1 hedge funds with bullish positions and the average amount invested in these stocks was $1413 million. That figure was $580 million in XP’s case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 8 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 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 -22.8% since the end of June (through 10/22) 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.
