Is Xcerra Corp (XCRA) A Good Stock To Buy?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Xcerra Corp (NASDAQ:XCRA) has experienced an increase in hedge fund sentiment in recent months. XCRA was in 13 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with XCRA positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Preferred Apartment Communities Inc. (NYSEAMEX:APTS), Sangamo Biosciences, Inc. (NASDAQ:SGMO), and Blue Bird Copr (NASDAQ:BLBD) to gather more data points.

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.

Now, let’s take a gander at the new action regarding Xcerra Corp (NASDAQ:XCRA).

How have hedgies been trading Xcerra Corp (NASDAQ:XCRA)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in XCRA heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Brett Hendrickson’s Nokomis Capital has the most valuable position in Xcerra Corp (NASDAQ:XCRA), worth close to $24.2 million, accounting for 5.2% of its total 13F portfolio. On Nokomis Capital’s heels is Chuck Royce of Royce & Associates, with a $14 million position. Other peers that are bullish consist of Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are 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.

Now, some big names have been driving this bullishness. Israel Englander’s Millennium Management initiated the largest position in Xcerra Corp (NASDAQ:XCRA). Millennium Management had $1 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $0.2 million position during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Xcerra Corp (NASDAQ:XCRA) but similarly valued. We will take a look at Preferred Apartment Communities Inc. (NYSEAMEX:APTS), Sangamo Biosciences, Inc. (NASDAQ:SGMO), Blue Bird Copr (NASDAQ:BLBD), and Central European Media Enterprises Ltd. (NASDAQ:CETV). This group of stocks’ market caps match XCRA’s market cap.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $50 million in XCRA’s case. Sangamo Biosciences, Inc. (NASDAQ:SGMO) is the most popular stock in this table. On the other hand Preferred Apartment Communities Inc. (NYSEAMEX:APTS) is the least popular one with only 7 bullish hedge fund positions. Xcerra Corp (NASDAQ:XCRA) 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 SGMO might be a better candidate to consider taking a long position in.

Disclosure: None