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Is Destination XL Group Inc (DXLG) A Good Stock To Buy?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31, so let’s proceed with the discussion of the hedge fund sentiment on Destination XL Group Inc (NASDAQ:DXLG).

Destination XL Group Inc (NASDAQ:DXLG) has seen an increase in hedge fund interest in recent months. DXLG was in 12 hedge funds’ portfolios at the end of March. There were 8 hedge funds in our database with DXLG holdings at the end of the previous quarter. Our calculations also showed that DXLG isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Carlo Cannell

We’re going to take a gander at the new hedge fund action surrounding Destination XL Group Inc (NASDAQ:DXLG).

How have hedgies been trading Destination XL Group Inc (NASDAQ:DXLG)?

At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in DXLG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

DXLG_june2019

Among these funds, Red Mountain Capital held the most valuable stake in Destination XL Group Inc (NASDAQ:DXLG), which was worth $19.7 million at the end of the first quarter. On the second spot was Cannell Capital which amassed $12.9 million worth of shares. Moreover, Prescott Group Capital Management, Roumell Asset Management, and Renaissance Technologies were also bullish on Destination XL Group Inc (NASDAQ:DXLG), allocating a large percentage of their portfolios to this stock.

Now, some big names were leading the bulls’ herd. Bailard Inc, managed by Thomas Bailard, created the most outsized position in Destination XL Group Inc (NASDAQ:DXLG). Bailard Inc had $0.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.1 million position during the quarter. The following funds were also among the new DXLG investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt. and Israel Englander’s Millennium Management.

Let’s now review hedge fund activity in other stocks similar to Destination XL Group Inc (NASDAQ:DXLG). These stocks are USA Truck, Inc. (NASDAQ:USAK), CyberOptics Corporation (NASDAQ:CYBE), Jupai Holdings Limited (NYSE:JP), and RiceBran Technologies (NASDAQ:RIBT). This group of stocks’ market caps are similar to DXLG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
USAK 11 15716 1
CYBE 5 6778 2
JP 1 655 -2
RIBT 4 2755 1
Average 5.25 6476 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $45 million in DXLG’s case. USA Truck, Inc. (NASDAQ:USAK) is the most popular stock in this table. On the other hand Jupai Holdings Limited (NYSE:JP) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Destination XL Group Inc (NASDAQ:DXLG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately DXLG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DXLG were disappointed as the stock returned -29.4% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.

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

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