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Hedge Funds Have Never Been This Bullish On Xeris Pharmaceuticals, Inc. (XERS)

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 Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) based on that data and determine whether they were really smart about the stock.

Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) was in 10 hedge funds’ portfolios at the end of March. XERS investors should be aware of an increase in support from the world’s most elite money managers in recent months. There were 6 hedge funds in our database with XERS positions at the end of the previous quarter. Our calculations also showed that XERS 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.

In the 21st century investor’s toolkit there are numerous gauges investors use to grade their stock investments. A pair of the most under-the-radar gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the broader indices by a superb amount (see the details here).

John Petry Sessa Capital

John Petry of Sessa Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the key hedge fund action encompassing Xeris Pharmaceuticals, Inc. (NASDAQ:XERS).

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

Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from the previous quarter. The graph below displays the number of hedge funds with bullish position in XERS over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Deerfield Management held the most valuable stake in Xeris Pharmaceuticals, Inc. (NASDAQ:XERS), which was worth $6.7 million at the end of the third quarter. On the second spot was Sessa Capital which amassed $6.3 million worth of shares. Redmile Group, Hound Partners, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sessa Capital allocated the biggest weight to Xeris Pharmaceuticals, Inc. (NASDAQ:XERS), around 0.77% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, earmarking 0.21 percent of its 13F equity portfolio to XERS.

Now, key money managers have jumped into Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) headfirst. Sessa Capital, managed by John Petry, created the most outsized position in Xeris Pharmaceuticals, Inc. (NASDAQ:XERS). Sessa Capital had $6.3 million invested in the company at the end of the quarter. Jonathan Auerbach’s Hound Partners also initiated a $1 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Renaissance Technologies, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now review hedge fund activity in other stocks similar to Xeris Pharmaceuticals, Inc. (NASDAQ:XERS). These stocks are Inspired Entertainment, Inc. (NASDAQ:INSE), Potbelly Corp (NASDAQ:PBPB), Arbutus Biopharma Corp (NASDAQ:ABUS), and Citizens Community Bancorp Inc. (NASDAQ:CZWI). All of these stocks’ market caps match XERS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INSE 6 16663 0
PBPB 7 10578 -4
ABUS 7 5169 -2
CZWI 6 10048 -1
Average 6.5 10615 -1.75

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 $11 million. That figure was $22 million in XERS’s case. Potbelly Corp (NASDAQ:PBPB) is the most popular stock in this table. On the other hand Inspired Entertainment, Inc. (NASDAQ:INSE) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Xeris Pharmaceuticals, Inc. (NASDAQ:XERS) 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on XERS as the stock returned 36.4% in Q2 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.