Hedge Funds Are Selling XOMA Corp (XOMA)

Page 1 of 2

XOMA Corp (NASDAQ:XOMA) investors should pay attention to a decrease in hedge fund interest lately.


If you’d ask most investors, hedge funds are perceived as slow, outdated financial tools of the past. While there are over 8000 funds trading at the moment, we hone in on the leaders of this club, about 450 funds. It is estimated that this group oversees most of the hedge fund industry’s total asset base, and by paying attention to their highest performing picks, we have unsheathed a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as integral, positive insider trading activity is another way to break down the financial markets. As the old adage goes: there are a number of reasons for a corporate insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).

With all of this in mind, let’s take a peek at the key action surrounding XOMA Corp (NASDAQ:XOMA).

What does the smart money think about XOMA Corp (NASDAQ:XOMA)?

At the end of the fourth quarter, a total of 7 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Julian Baker and Felix Baker’s Baker Bros. Advisors had the largest position in XOMA Corp (NASDAQ:XOMA), worth close to $48.7 million, comprising 1.3% of its total 13F portfolio. The second largest stake is held by RA Capital Management, managed by Peter Kolchinsky, which held a $15.7 million position; the fund has 5.5% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Samuel Isaly’s OrbiMed Advisors, Israel Englander’s Millennium Management and Richard Driehaus’s Driehaus Capital.

Since XOMA Corp (NASDAQ:XOMA) has experienced bearish sentiment from the smart money, it’s easy to see that there was a specific group of hedgies who sold off their positions entirely at the end of the year. It’s worth mentioning that Jim Simons’s Renaissance Technologies cut the largest position of all the hedgies we monitor, totaling an estimated $0.3 million in stock. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with XOMA Corp (NASDAQ:XOMA)?

Insider purchases made by high-level executives is most useful when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time frame, XOMA Corp (NASDAQ:XOMA) has seen 1 unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to XOMA Corp (NASDAQ:XOMA). These stocks are NewLink Genetics Corp (NASDAQ:NLNK), Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), Repros Therapeutics Inc (NASDAQ:RPRX), Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS), and Cerus Corporation (NASDAQ:CERS). This group of stocks are in the biotechnology industry and their market caps resemble XOMA’s market cap.

Page 1 of 2