While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding XPeng Inc. (NYSE:XPEV).
XPeng Inc. (NYSE:XPEV) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. XPeng Inc. (NYSE:XPEV) was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. There were 19 hedge funds in our database with XPEV positions at the end of the second quarter. Our calculations also showed that XPEV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to take a look at the recent hedge fund action regarding XPeng Inc. (NYSE:XPEV).
Philippe Laffont of Coatue Management
Do Hedge Funds Think XPEV Is A Good Stock To Buy Now?
At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in XPEV a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Coatue Management was the largest shareholder of XPeng Inc. (NYSE:XPEV), with a stake worth $342.7 million reported as of the end of September. Trailing Coatue Management was Marshall Wace LLP, which amassed a stake valued at $80.7 million. Citadel Investment Group, Bridgewater Associates, and Millennium Management 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 Tairen Capital allocated the biggest weight to XPeng Inc. (NYSE:XPEV), around 2.04% of its 13F portfolio. One01 Capital is also relatively very bullish on the stock, setting aside 1.58 percent of its 13F equity portfolio to XPEV.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Renaissance Technologies, established the most valuable position in XPeng Inc. (NYSE:XPEV). Renaissance Technologies had $37.5 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $11.9 million position during the quarter. The other funds with brand new XPEV positions are Larry Chen and Terry Zhang’s Tairen Capital, Canhui Ou’s One01 Capital, and Tor Minesuk’s Mondrian Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as XPeng Inc. (NYSE:XPEV) but similarly valued. These stocks are Equity Residential (NYSE:EQR), Keysight Technologies Inc (NYSE:KEYS), Sun Life Financial Inc. (NYSE:SLF), D.R. Horton, Inc. (NYSE:DHI), The Kroger Co. (NYSE:KR), Ameriprise Financial, Inc. (NYSE:AMP), and Willis Towers Watson Public Limited Company (NASDAQ:WLTW). All of these stocks’ market caps are similar to XPEV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EQR | 32 | 558805 | 1 |
| KEYS | 30 | 675201 | -2 |
| SLF | 8 | 81688 | -3 |
| DHI | 51 | 2184785 | 6 |
| KR | 39 | 3919870 | 0 |
| AMP | 40 | 1309163 | 3 |
| WLTW | 75 | 5055019 | 5 |
| Average | 39.3 | 1969219 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.3 hedge funds with bullish positions and the average amount invested in these stocks was $1969 million. That figure was $657 million in XPEV’s case. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the most popular stock in this table. On the other hand Sun Life Financial Inc. (NYSE:SLF) is the least popular one with only 8 bullish hedge fund positions. XPeng Inc. (NYSE:XPEV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for XPEV is 47.7. 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 gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on XPEV as the stock returned 29.8% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
