In this article we will check out the progression of hedge fund sentiment towards XBiotech Inc. (NASDAQ:XBIT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is XBiotech Inc. (NASDAQ:XBIT) a good investment right now? The best stock pickers are taking a bullish view. The number of long hedge fund positions moved up by 2 recently. Our calculations also showed that XBIT 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.
At the moment there are numerous gauges stock market investors employ to evaluate stocks. Two of the most under-the-radar gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform the S&P 500 by a very impressive margin (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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 take a peek at the new hedge fund action surrounding XBiotech Inc. (NASDAQ:XBIT).
What does smart money think about XBiotech Inc. (NASDAQ:XBIT)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards XBIT over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in XBiotech Inc. (NASDAQ:XBIT) was held by Arrowstreet Capital, which reported holding $1.1 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $0.5 million position. Other investors bullish on the company included AQR Capital Management, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Paloma Partners allocated the biggest weight to XBiotech Inc. (NASDAQ:XBIT), around 0.01% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to XBIT.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in XBiotech Inc. (NASDAQ:XBIT). Balyasny Asset Management had $0.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new XBIT investors: Donald Sussman’s Paloma Partners and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as XBiotech Inc. (NASDAQ:XBIT) but similarly valued. These stocks are BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), Daily Journal Corporation (NASDAQ:DJCO), DURECT Corporation (NASDAQ:DRRX), and Autolus Therapeutics plc (NASDAQ:AUTL). This group of stocks’ market values are similar to XBIT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $4 million in XBIT’s case. BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is the most popular stock in this table. On the other hand Daily Journal Corporation (NASDAQ:DJCO) is the least popular one with only 2 bullish hedge fund positions. XBiotech Inc. (NASDAQ:XBIT) is not the least popular stock in this group but hedge fund interest is still below 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on XBIT as the stock returned 29.3% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.