Is XenoPort, Inc. (XNPT) A Good Stock To Buy?

Since XenoPort, Inc. (NASDAQ:XNPT) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers who were dropping their entire stakes heading into Q4. Intriguingly, Jeffrey Jay and David Kroin’s Great Point Partners dumped the biggest position of the “upper crust” of funds watched by Insider Monkey, worth about $3 million in stock, and Jim Simons’ Renaissance Technologies was right behind this move, as the fund dropped about $1.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to XenoPort, Inc. (NASDAQ:XNPT). These stocks are Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), Harte-Hanks, Inc. (NYSE:HHS), Cambium Learning Group, Inc. (NASDAQ:ABCD), and West Marine, Inc. (NASDAQ:WMAR). This group of stocks’ market valuations resemble XNPT’s market valuation.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $24 million, compared to $84 million in XNPT’s case. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is the most popular stock in this table with 17 funds reporting long positions. On the other hand Cambium Learning Group, Inc. (NASDAQ:ABCD) is the least popular one with only 4 funds holding shares. XenoPort, Inc. (NASDAQ:XNPT) 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. In this regard RIGL might be a better candidate to consider a long position.