Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Xerium Technologies, Inc. (NYSE:XRM) from the perspective of those elite funds.
Is Xerium Technologies, Inc. (NYSE:XRM) ready to rally soon? The smart money is turning less bullish. The number of bullish hedge fund positions dropped by 2 lately. Xerium Technologies, Inc. (NYSE:XRM) was in 9 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with Xerium Technologies, Inc. (NYSE:XRM) holdings at the end of the previous quarter. The stock market held a similar view of the stock, with the stock losing 28.68% value during the third quarter.
In order to find out more about the hedge fund sentiment, we will compare Xerium Technologies, Inc. (NYSE:XRM) to other stocks, including Utah Medical Products, Inc. (NASDAQ:UTMD), Genie Energy Ltd (NYSE:GNE), and Hallador Energy Co (NASDAQ:HNRG) to get a better sense of its popularity.
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In today’s marketplace, there are a large number of indicators shareholders use to analyze their holdings. Some of the most innovative indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best fund managers can trounce the broader indices by a significant margin (see the details here).
Keeping this in mind, we’re going to review the recent action surrounding Xerium Technologies, Inc. (NYSE:XRM).
What does the smart money think about Xerium Technologies, Inc. (NYSE:XRM)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 18% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Archer Capital Management, managed by Eric Edidin and Josh Lobel, holds the biggest position in Xerium Technologies, Inc. (NYSE:XRM). Archer Capital Management has an $8.7 million position in the stock, comprising 1.2% of its 13F portfolio. The second most bullish fund manager is Jeffrey Moskowitz of Harvey Partners, with an $8.4 million position; the fund has 5.2% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism encompass Richard S. Meisenberg’s ACK Asset Management, Renaissance Technologies and Charles Paquelet’s Skylands Capital.
Judging by the fact that Xerium Technologies, Inc. (NYSE:XRM) has experienced a declining sentiment from hedge fund managers, logic holds that there was a specific group of fund managers who sold off their full holdings in the third quarter. Intriguingly, Michael Reeber’s Andalusian Capital Partners cut the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $1.1 million in stock, and Cliff Asness’ AQR Capital Management was right behind this move, as the fund cut about $0.2 million worth of shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Xerium Technologies, Inc. (NYSE:XRM). We will take a look at Utah Medical Products, Inc. (NASDAQ:UTMD), Genie Energy Ltd (NYSE:GNE), Hallador Energy Co (NASDAQ:HNRG), and DSP Group, Inc. (NASDAQ:DSPG). All of these stocks’ market caps are closest to Xerium Technologies, Inc. (NYSE:XRM)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UTMD | 4 | 21949 | -1 |
| GNE | 4 | 11419 | -1 |
| HNRG | 9 | 3700 | 2 |
| DSPG | 8 | 31845 | -1 |
As you can see, these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $34 million in Xerium Technologies, Inc. (NYSE:XRM)’s case. Hallador Energy Co (NASDAQ:HNRG) is the most popular stock in this table. On the other hand, Utah Medical Products, Inc. (NASDAQ:UTMD) is the least popular one with only 4 bullish hedge fund positions. Xerium Technologies, Inc. (NYSE:XRM) 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, Hallador Energy Co (NASDAQ:HNRG) might be a better candidate to consider a long position.
