Is EXLS A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards ExlService Holdings, Inc. (NASDAQ:EXLS).

Is EXLS a good stock to buy now? ExlService Holdings, Inc. (NASDAQ:EXLS) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. ExlService Holdings, Inc. (NASDAQ:EXLS) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EXLS isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

According to most traders, hedge funds are assumed to be underperforming, outdated investment vehicles of the past. While there are over 8000 funds with their doors open at present, Our experts hone in on the moguls of this club, around 850 funds. These money managers oversee the lion’s share of all hedge funds’ total asset base, and by monitoring their first-class stock picks, Insider Monkey has formulated a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Gifford Combs - Dalton Investments

Gifford Combs of Dalton Investments

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s view the new hedge fund action encompassing ExlService Holdings, Inc. (NASDAQ:EXLS).

Do Hedge Funds Think EXLS Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EXLS over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is EXLS A Good Stock To Buy?

More specifically, Arrowstreet Capital was the largest shareholder of ExlService Holdings, Inc. (NASDAQ:EXLS), with a stake worth $9.8 million reported as of the end of September. Trailing Arrowstreet Capital was Renaissance Technologies, which amassed a stake valued at $9.3 million. Marshall Wace LLP, Millennium Management, and Dalton Investments 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 Dalton Investments allocated the biggest weight to ExlService Holdings, Inc. (NASDAQ:EXLS), around 3.58% of its 13F portfolio. Lee Capital Management is also relatively very bullish on the stock, designating 2.04 percent of its 13F equity portfolio to EXLS.

Now, specific money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most outsized position in ExlService Holdings, Inc. (NASDAQ:EXLS). Marshall Wace LLP had $8.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $6.8 million investment in the stock during the quarter. The other funds with brand new EXLS positions are Thomas Lee’s Lee Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks similar to ExlService Holdings, Inc. (NASDAQ:EXLS). These stocks are CVB Financial Corp. (NASDAQ:CVBF), Vishay Intertechnology (NYSE:VSH), CONMED Corporation (NASDAQ:CNMD), Arco Platform Limited (NASDAQ:ARCE), Strategic Education Inc (NASDAQ:STRA), GATX Corporation (NYSE:GATX), and Pactiv Evergreen Inc. (NASDAQ:PTVE). This group of stocks’ market values match EXLS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVBF 13 34209 -1
VSH 27 333332 -1
CNMD 33 286962 2
ARCE 14 143267 -11
STRA 23 140362 2
GATX 10 144249 -7
PTVE 15 54939 15
Average 19.3 162474 -0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $162 million. That figure was $57 million in EXLS’s case. CONMED Corporation (NASDAQ:CNMD) is the most popular stock in this table. On the other hand GATX Corporation (NYSE:GATX) is the least popular one with only 10 bullish hedge fund positions. ExlService Holdings, Inc. (NASDAQ:EXLS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EXLS is 57.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on EXLS as the stock returned 27.8% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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