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Is Exelixis, Inc. (EXEL) Going To Burn These Hedge Funds ?

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Exelixis, Inc. (NASDAQ:EXEL).

Exelixis, Inc. (NASDAQ:EXEL) shareholders have witnessed a decrease in support from the world’s most elite money managers of late. Our calculations also showed that EXEL isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most shareholders, hedge funds are assumed to be worthless, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, We look at the elite of this group, around 750 funds. These money managers oversee the lion’s share of the smart money’s total capital, and by monitoring their matchless picks, Insider Monkey has found many investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

Samuel Isaly Orbimed Advisors

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the fresh hedge fund action surrounding Exelixis, Inc. (NASDAQ:EXEL).

How have hedgies been trading Exelixis, Inc. (NASDAQ:EXEL)?

At the end of the second quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards EXEL over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

EXEL_oct2019

More specifically, AQR Capital Management was the largest shareholder of Exelixis, Inc. (NASDAQ:EXEL), with a stake worth $292.6 million reported as of the end of March. Trailing AQR Capital Management was Renaissance Technologies, which amassed a stake valued at $287.5 million. OrbiMed Advisors, Farallon Capital, and Alkeon Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Exelixis, Inc. (NASDAQ:EXEL) has witnessed a decline in interest from the smart money, it’s safe to say that there was a specific group of funds who were dropping their full holdings by the end of the second quarter. Intriguingly, Robert Pohly’s Samlyn Capital dumped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, worth about $11.4 million in stock. Louis Bacon’s fund, Moore Global Investments, also dropped its stock, about $4.2 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds by the end of the second quarter.

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 Companhia Brasileira de Distrib. (NYSE:CBD), Brookfield Renewable Partners L.P. (NYSE:BEP), Newell Brands Inc. (NASDAQ:NWL), and Nektar Therapeutics (NASDAQ:NKTR). This group of stocks’ market valuations are closest to EXEL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CBD 11 62442 -1
BEP 4 7705 1
NWL 29 1131918 -1
NKTR 19 228273 2
Average 15.75 357585 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $358 million. That figure was $809 million in EXEL’s case. Newell Brands Inc. (NASDAQ:NWL) is the most popular stock in this table. On the other hand Brookfield Renewable Partners L.P. (NYSE:BEP) is the least popular one with only 4 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EXEL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EXEL were disappointed as the stock returned -17.3% during the third quarter 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 many of these stocks already outperformed the market so far this year.

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

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