Hedge Funds Are Crazy About Xeris Pharmaceuticals, Inc. (XERS)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Is Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) an attractive stock to buy now? Investors who are in the know were getting more bullish. The number of long hedge fund bets inched up by 10 in recent months. Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistics is 10. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that XERS isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

To the average investor there are a large number of methods stock market investors have at their disposal to analyze publicly traded companies. A pair of the most underrated methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the S&P 500 by a significant margin (see the details here).

James Flynn Deerfield Management

James E. Flynn of Deerfield Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. 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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s view the latest hedge fund action encompassing Xeris Pharmaceuticals, Inc. (NASDAQ:XERS).

How are hedge funds trading Xeris Pharmaceuticals, Inc. (NASDAQ:XERS)?

At the end of June, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in XERS over the last 20 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Is XERS A Good Stock To Buy?

The largest stake in Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) was held by Sessa Capital, which reported holding $11.1 million worth of stock at the end of September. It was followed by Deerfield Management with a $8.5 million position. Other investors bullish on the company included Redmile Group, Sabby Capital, and Hound Partners. In terms of the portfolio weights assigned to each position Kamunting Street Capital allocated the biggest weight to Xeris Pharmaceuticals, Inc. (NASDAQ:XERS), around 1.72% of its 13F portfolio. Sessa Capital is also relatively very bullish on the stock, dishing out 1.12 percent of its 13F equity portfolio to XERS.

Now, some big names have been driving this bullishness. Sabby Capital, managed by Hal Mintz, established the most outsized position in Xeris Pharmaceuticals, Inc. (NASDAQ:XERS). Sabby Capital had $2.9 million invested in the company at the end of the quarter. Jonathan Auerbach’s Hound Partners also made a $2.5 million investment in the stock during the quarter. The other funds with brand new XERS positions are Allan Teh’s Kamunting Street Capital, Israel Englander’s Millennium Management, and Lawrence Hawkins’s Prosight Capital.

Let’s check out hedge fund activity in other stocks similar to Xeris Pharmaceuticals, Inc. (NASDAQ:XERS). These stocks are Western Copper and Gold Corporation (NYSE:WRN), Provident Financial Holdings, Inc. (NASDAQ:PROV), Sky Solar Holdings, Ltd. (NASDAQ:SKYS), Express, Inc. (NYSE:EXPR), Prudential Bancorp, Inc. (NASDAQ:PBIP), Information Services Group, Inc. (NASDAQ:III), and Limestone Bancorp, Inc. (NASDAQ:LMST). All of these stocks’ market caps are similar to XERS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WRN 2 194 0
PROV 1 5563 -1
SKYS 1 863 0
EXPR 13 34579 0
PBIP 3 14792 -1
III 5 18287 -2
LMST 2 4360 -1
Average 3.9 11234 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.9 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $40 million in XERS’s case. Express, Inc. (NYSE:EXPR) is the most popular stock in this table. On the other hand Provident Financial Holdings, Inc. (NASDAQ:PROV) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) is more popular among hedge funds. Our overall hedge fund sentiment score for XERS is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 returned 24.8% in 2020 through the end of September but still managed to beat the market by 19.3 percentage points. Hedge funds were also right about betting on XERS as the stock returned 122.9% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.