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 XOMA Corp (NASDAQ:XOMA).
Is XOMA a good stock to buy now? XOMA Corp (NASDAQ:XOMA) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. XOMA Corp (NASDAQ:XOMA) was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. There were 12 hedge funds in our database with XOMA positions at the end of the second quarter. Our calculations also showed that XOMA 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.
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. Now let’s take a glance at the key hedge fund action surrounding XOMA Corp (NASDAQ:XOMA).
Do Hedge Funds Think XOMA Is A Good Stock To Buy Now?
At third quarter’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in XOMA over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, Biotechnology Value Fund / BVF Inc was the largest shareholder of XOMA Corp (NASDAQ:XOMA), with a stake worth $78.8 million reported as of the end of September. Trailing Biotechnology Value Fund / BVF Inc was Opaleye Management, which amassed a stake valued at $8.6 million. Stonepine Capital, EcoR1 Capital, 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to XOMA Corp (NASDAQ:XOMA), around 4.29% of its 13F portfolio. Stonepine Capital is also relatively very bullish on the stock, designating 2.94 percent of its 13F equity portfolio to XOMA.
Due to the fact that XOMA Corp (NASDAQ:XOMA) has faced bearish sentiment from the smart money, we can see that there were a few money managers who were dropping their positions entirely heading into Q4. At the top of the heap, Kamran Moghtaderi’s Eversept Partners cut the largest investment of the 750 funds monitored by Insider Monkey, comprising about $1.3 million in stock. Steve Cohen’s fund, Point72 Asset Management, also said goodbye to its stock, about $1 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as XOMA Corp (NASDAQ:XOMA) but similarly valued. We will take a look at Arcimoto, Inc. (NASDAQ:FUV), Bioceres Crop Solutions Corp. (NYSE:BIOX), NL Industries, Inc. (NYSE:NL), Atomera Incorporated (NASDAQ:ATOM), SmartFinancial, Inc. (NASDAQ:SMBK), ADMA Biologics Inc (NASDAQ:ADMA), and Cyclerion Therapeutics, Inc. (NASDAQ:CYCN). All of these stocks’ market caps are closest to XOMA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $93 million in XOMA’s case. ADMA Biologics Inc (NASDAQ:ADMA) is the most popular stock in this table. On the other hand Arcimoto, Inc. (NASDAQ:FUV) is the least popular one with only 1 bullish hedge fund positions. XOMA Corp (NASDAQ:XOMA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XOMA is 45.6. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on XOMA as the stock returned 88.2% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.