Is Ixia (XXIA) Going to Burn These Hedge Funds?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Ixia (NASDAQ:XXIA) .

Ixia (NASDAQ:XXIA) investors should be aware of an increase in support from the world’s most successful money managers recently. 18 hedge funds that we track were long the stock on September 30. There were 17 hedge funds in our database with XXIA holdings at the end of the June quarter. At the end of this article we will also compare XXIA to other stocks including Scientific Games Corp (NASDAQ:SGMS), Trueblue Inc (NYSE:TBI), and The Spectranetics Corporation (NASDAQ:SPNC) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What have hedge funds been doing with Ixia (NASDAQ:XXIA)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 6% uptick from the second quarter of 2016. On the other hand, there were a total of 19 hedge funds with a bullish position in XXIA at the beginning of this year, which later reached 24, so current ownership levels remain depressed. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies holds the most valuable position in Ixia (NASDAQ:XXIA) which has a $19 million position in the stock. On Renaissance Technologies’ heels is Clint Carlson’s Carlson Capital, which holds an $18.8 million position. Some other peers with similar optimism include George Soros’ Soros Fund Management, Mario Gabelli’s GAMCO Investors, and Israel Englander’s Millennium Management. We should note that Soros Fund Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Consequently, specific money managers have jumped into Ixia (NASDAQ:XXIA) headfirst. Carlson Capital assembled the biggest position in Ixia (NASDAQ:XXIA). Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1.3 million investment in the stock during the quarter. The other funds with brand new XXIA positions are Matthew Tewksbury’s Stevens Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Ixia (NASDAQ:XXIA). These stocks are Scientific Games Corp (NASDAQ:SGMS), Trueblue Inc (NYSE:TBI), The Spectranetics Corporation (NASDAQ:SPNC), and Sun Hydraulics Corporation (NASDAQ:SNHY). This group of stocks’ market caps match XXIA’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $90 million in XXIA’s case. The Spectranetics Corporation (NASDAQ:SPNC) is the most popular stock in this table. On the other hand Sun Hydraulics Corporation (NASDAQ:SNHY) is the least popular one with only 5 bullish hedge fund positions. Ixia (NASDAQ:XXIA) 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 SPNC might be a better candidate to consider taking a long position in.

Disclosure: None