Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Xcel Brands Inc (NASDAQ:XELB) in this article.
Is XELB a good stock to buy? Investors who are in the know were in an optimistic mood. The number of long hedge fund bets increased by 2 recently. Xcel Brands Inc (NASDAQ:XELB) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 4. Our calculations also showed that XELB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the latest hedge fund action regarding Xcel Brands Inc (NASDAQ:XELB).
Do Hedge Funds Think XELB Is A Good Stock To Buy Now?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 200% from one quarter earlier. By comparison, 1 hedge funds held shares or bullish call options in XELB a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Xcel Brands Inc (NASDAQ:XELB), which was worth $0.2 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $0.1 million worth of shares. Millennium Management was 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 0 allocated the biggest weight to Xcel Brands Inc (NASDAQ:XELB), around 0.0002% of its 13F portfolio. 0 is also relatively very bullish on the stock, earmarking 0 percent of its 13F equity portfolio to XELB.
Consequently, some big names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Xcel Brands Inc (NASDAQ:XELB). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0 million investment in the stock during the quarter.
Let’s check out hedge fund activity in other stocks similar to Xcel Brands Inc (NASDAQ:XELB). These stocks are Integrated Media Technology Limited (NASDAQ:IMTE), NovaBay Pharmaceuticals, Inc. (NYSE:NBY), CSP Inc. (NASDAQ:CSPI), Panbela Therapeutics, Inc. (NASDAQ:PBLA), GigaMedia Limited (NASDAQ:GIGM), Ion Geophysical Corp (NYSE:IO), and Live Ventures Inc. (NASDAQ:LIVE). This group of stocks’ market caps resemble XELB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 1.1 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $0 million in XELB’s case. Ion Geophysical Corp (NYSE:IO) is the most popular stock in this table. On the other hand Integrated Media Technology Limited (NASDAQ:IMTE) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Xcel Brands Inc (NASDAQ:XELB) is more popular among hedge funds. Our overall hedge fund sentiment score for XELB is 79.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on XELB as the stock returned 20.1% since the end of March (through 6/11) 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.