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Did Hedge Funds Make The Right Call On Xperi Holding Corporation (XPER) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Xperi Holding Corporation (NASDAQ:XPER) based on that data and determine whether they were really smart about the stock.

Xperi Holding Corporation (NASDAQ:XPER) has seen a decrease in hedge fund interest in recent months. XPER was in 20 hedge funds’ portfolios at the end of the first quarter of 2020. There were 23 hedge funds in our database with XPER holdings at the end of the previous quarter. Our calculations also showed that XPER isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to view the latest hedge fund action surrounding Xperi Holding Corporation (NASDAQ:XPER).

Hedge fund activity in Xperi Holding Corporation (NASDAQ:XPER)

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards XPER over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

The largest stake in Xperi Holding Corporation (NASDAQ:XPER) was held by Renaissance Technologies, which reported holding $36.8 million worth of stock at the end of September. It was followed by D E Shaw with a $13.5 million position. Other investors bullish on the company included Beryl Capital Management, Arrowstreet Capital, and Harvey Partners. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to Xperi Holding Corporation (NASDAQ:XPER), around 5.02% of its 13F portfolio. Beryl Capital Management is also relatively very bullish on the stock, earmarking 2.44 percent of its 13F equity portfolio to XPER.

Judging by the fact that Xperi Holding Corporation (NASDAQ:XPER) has experienced declining sentiment from the smart money, it’s easy to see that there is a sect of hedgies that elected to cut their entire stakes by the end of the first quarter. It’s worth mentioning that Donald Sussman’s Paloma Partners dumped the biggest stake of all the hedgies followed by Insider Monkey, worth an estimated $2.1 million in stock, and Minhua Zhang’s Weld Capital Management was right behind this move, as the fund cut about $1.1 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Xperi Holding Corporation (NASDAQ:XPER) but similarly valued. These stocks are Republic Bancorp, Inc. (NASDAQ:RBCAA), GreenSky, Inc. (NASDAQ:GSKY), Associated Capital Group, Inc. (NYSE:AC), and Amphastar Pharmaceuticals Inc (NASDAQ:AMPH). This group of stocks’ market valuations are similar to XPER’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RBCAA 5 8845 -3
GSKY 9 14686 -3
AC 6 53890 0
AMPH 6 19619 0
Average 6.5 24260 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $109 million in XPER’s case. GreenSky, Inc. (NASDAQ:GSKY) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. (NASDAQ:RBCAA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Xperi Holding Corporation (NASDAQ:XPER) is more popular among hedge funds. 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 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. Unfortunately XPER wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on XPER were disappointed as the stock returned 23.2% since the end of the first 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.