Hedge Funds Going Back and Forth About Exelixis, Inc. (EXEL)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Exelixis, Inc. (NASDAQ:EXEL)?

Is Exelixis, Inc. (NASDAQ:EXEL) ready to rally soon? The best stock pickers are getting more optimistic. The number of long hedge fund positions moved up by 7 recently. Our calculations also showed that EXEL 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Peter Kolchinsky of RA Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this oneWe interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the new hedge fund action encompassing Exelixis, Inc. (NASDAQ:EXEL).

What have hedge funds been doing with Exelixis, Inc. (NASDAQ:EXEL)?

At Q1’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in EXEL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the largest position in Exelixis, Inc. (NASDAQ:EXEL). Renaissance Technologies has a $345.6 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Farallon Capital, holding a $172.2 million position; 1.5% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions contain Cliff Asness’s AQR Capital Management, Peter Kolchinsky’s RA Capital Management and Samuel Isaly’s OrbiMed Advisors. In terms of the portfolio weights assigned to each position RA Capital Management allocated the biggest weight to Exelixis, Inc. (NASDAQ:EXEL), around 2.46% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, setting aside 2.34 percent of its 13F equity portfolio to EXEL.

As aggregate interest increased, key money managers were breaking ground themselves. RA Capital Management, managed by Peter Kolchinsky, created the biggest position in Exelixis, Inc. (NASDAQ:EXEL). RA Capital Management had $77.9 million invested in the company at the end of the quarter. Robert Pohly’s Samlyn Capital also made a $18.2 million investment in the stock during the quarter. The following funds were also among the new EXEL investors: Steve Cohen’s Point72 Asset Management, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Bhagwan Jay Rao’s Integral Health Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Exelixis, Inc. (NASDAQ:EXEL) but similarly valued. We will take a look at Apartment Investment and Management Co. (NYSE:AIV), Jones Lang LaSalle Inc (NYSE:JLL), American Airlines Group Inc (NASDAQ:AAL), and CubeSmart (NYSE:CUBE). All of these stocks’ market caps are similar to EXEL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AIV 21 395202 -3
JLL 26 660081 -4
AAL 36 681734 -5
CUBE 18 185612 -9
Average 25.25 480657 -5.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $481 million. That figure was $935 million in EXEL’s case. American Airlines Group Inc (NASDAQ:AAL) is the most popular stock in this table. On the other hand CubeSmart (NYSE:CUBE) is the least popular one with only 18 bullish hedge fund positions. Exelixis, Inc. (NASDAQ:EXEL) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on EXEL as the stock returned 43.5% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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