Is XFOR A Good Stock To Buy Now?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded X4 Pharmaceuticals, Inc. (NASDAQ:XFOR) based on those filings.

Is XFOR a good stock to buy now? X4 Pharmaceuticals, Inc. (NASDAQ:XFOR) shareholders have witnessed a decrease in enthusiasm from smart money of late. X4 Pharmaceuticals, Inc. (NASDAQ:XFOR) was in 8 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. Our calculations also showed that XFOR 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.

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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Peter Kolchinsky of RA Capital Management

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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. With all of this in mind we’re going to take a look at the recent hedge fund action regarding X4 Pharmaceuticals, Inc. (NASDAQ:XFOR).

How have hedgies been trading X4 Pharmaceuticals, Inc. (NASDAQ:XFOR)?

Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the second quarter of 2020. By comparison, 6 hedge funds held shares or bullish call options in XFOR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is XFOR A Good Stock To Buy?

More specifically, OrbiMed Advisors was the largest shareholder of X4 Pharmaceuticals, Inc. (NASDAQ:XFOR), with a stake worth $7.4 million reported as of the end of September. Trailing OrbiMed Advisors was Biotechnology Value Fund / BVF Inc, which amassed a stake valued at $5.4 million. Ikarian Capital, RA Capital Management, and Renaissance Technologies 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 Ikarian Capital allocated the biggest weight to X4 Pharmaceuticals, Inc. (NASDAQ:XFOR), around 0.36% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, designating 0.29 percent of its 13F equity portfolio to XFOR.

Since X4 Pharmaceuticals, Inc. (NASDAQ:XFOR) has witnessed bearish sentiment from the smart money, it’s easy to see that there were a few money managers that elected to cut their entire stakes heading into Q4. Intriguingly, Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund cut the biggest position of the 750 funds tracked by Insider Monkey, worth close to $5.3 million in stock. Bihua Chen’s fund, Cormorant Asset Management, also dropped its stock, about $1.8 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to X4 Pharmaceuticals, Inc. (NASDAQ:XFOR). We will take a look at Kura Sushi USA, Inc. (NASDAQ:KRUS), Cumulus Media Inc (NASDAQ:CMLS), IntriCon Corporation (NASDAQ:IIN), Palatin Technologies, Inc. (NYSE:PTN), Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), C&F Financial Corp (NASDAQ:CFFI), and Clipper Realty Inc. (NYSE:CLPR). This group of stocks’ market valuations are closest to XFOR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KRUS 5 17140 1
CMLS 7 24191 -4
IIN 3 16288 0
PTN 4 2079 -9
PIRS 15 31643 -6
CFFI 2 4115 0
CLPR 10 26099 0
Average 6.6 17365 -2.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.6 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $23 million in XFOR’s case. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is the most popular stock in this table. On the other hand C&F Financial Corp (NASDAQ:CFFI) is the least popular one with only 2 bullish hedge fund positions. X4 Pharmaceuticals, Inc. (NASDAQ:XFOR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XFOR is 46.1. 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. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately XFOR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on XFOR were disappointed as the stock returned -0.3% since the end of September (through 12/2) 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.

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