Is Xerox Corporation (NYSE:XRX) an exceptional investment today? Hedge funds are in a pessimistic mood. The number of long hedge fund bets dropped by 6 lately.
At the moment, there are plenty of metrics investors can use to watch stocks. Some of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can outclass their index-focused peers by a healthy amount (see just how much).
Equally as important, positive insider trading sentiment is another way to parse down the stock market universe. As the old adage goes: there are plenty of incentives for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the valuable potential of this strategy if shareholders understand where to look (learn more here).
With these “truths” under our belt, let’s take a look at the recent action regarding Xerox Corporation (NYSE:XRX).
What have hedge funds been doing with Xerox Corporation (NYSE:XRX)?
At year’s end, a total of 34 of the hedge funds we track held long positions in this stock, a change of -15% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.
According to our comprehensive database, Larry Robbins’s Glenview Capital had the largest position in Xerox Corporation (NYSE:XRX), worth close to $232 million billion, accounting for 3.3% of its total 13F portfolio. Coming in second is Greenlight Capital, managed by David Einhorn, which held a $177 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Matt Sirovich and Jeremy Mindich’s Scopia Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Thomas Ellis and Todd Hammer’s North Run Capital.
Since Xerox Corporation (NYSE:XRX) has witnessed falling interest from the smart money, it’s safe to say that there was a specific group of hedge funds who were dropping their entire stakes in Q4. It’s worth mentioning that Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC cut the biggest investment of the “upper crust” of funds we monitor, valued at close to $103 million in stock.. Jeffrey Tannenbaum’s fund, Fir Tree, also sold off its call options., about $34 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 6 funds in Q4.
What have insiders been doing with Xerox Corporation (NYSE:XRX)?
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, Xerox Corporation (NYSE:XRX) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).
With the returns shown by our tactics, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Xerox Corporation (NYSE:XRX) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.