We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Exelixis, Inc. (NASDAQ:EXEL) and determine whether hedge funds skillfully traded this stock.
Exelixis, Inc. (NASDAQ:EXEL) investors should pay attention to an increase in hedge fund sentiment lately. Exelixis, Inc. (NASDAQ:EXEL) was in 39 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EXEL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most investors, hedge funds are seen as unimportant, outdated investment tools of years past. While there are over 8000 funds trading today, Our experts choose to focus on the moguls of this group, around 850 funds. These hedge fund managers command the majority of the hedge fund industry’s total capital, and by shadowing their inimitable investments, Insider Monkey has revealed a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Donald Sussman of Paloma Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 let’s take a glance at the latest hedge fund action surrounding Exelixis, Inc. (NASDAQ:EXEL).
What have hedge funds been doing with Exelixis, Inc. (NASDAQ:EXEL)?
At the end of June, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EXEL over the last 20 quarters. So, let’s find 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, Renaissance Technologies has the number one position in Exelixis, Inc. (NASDAQ:EXEL), worth close to $546.2 million, accounting for 0.5% of its total 13F portfolio. Coming in second is Farallon Capital, with a $243.3 million position; 2% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish comprise Cliff Asness’s AQR Capital Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Samuel Isaly’s OrbiMed Advisors. In terms of the portfolio weights assigned to each position Sectoral Asset Management allocated the biggest weight to Exelixis, Inc. (NASDAQ:EXEL), around 2.09% of its 13F portfolio. Farallon Capital is also relatively very bullish on the stock, setting aside 2 percent of its 13F equity portfolio to EXEL.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, assembled the most valuable position in Exelixis, Inc. (NASDAQ:EXEL). Adage Capital Management had $9.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $9 million position during the quarter. The other funds with new positions in the stock are Ian Simm’s Impax Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Exelixis, Inc. (NASDAQ:EXEL) but similarly valued. We will take a look at Americold Realty Trust (NYSE:COLD), Formula One Group (NASDAQ:FWONA), Mohawk Industries, Inc. (NYSE:MHK), AGNC Investment Corp. (NASDAQ:AGNC), AptarGroup, Inc. (NYSE:ATR), Companhia de Saneamento Basico (NYSE:SBS), and WEX Inc (NYSE:WEX). This group of stocks’ market values resemble EXEL’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COLD,29,290324,4 FWONA,17,248890,0 MHK,32,693381,-4 AGNC,37,458061,10 ATR,26,210604,6 SBS,10,270233,2 WEX,24,399174,-11 Average,25,367238,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $1171 million in EXEL’s case. AGNC Investment Corp. (NASDAQ:AGNC) is the most popular stock in this table. On the other hand Companhia de Saneamento Basico (NYSE:SBS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Exelixis, Inc. (NASDAQ:EXEL) is more popular among hedge funds. Our overall hedge fund sentiment score for EXEL 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately EXEL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EXEL were disappointed as the stock returned -6.4% since the end of the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.