Is XPEV Stock A Buy or Sell?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded XPeng Inc. (NYSE:XPEV) based on those filings.

Is XPEV stock a buy or sell? Hedge funds were getting more bullish. The number of long hedge fund positions increased by 4 lately. XPeng Inc. (NYSE:XPEV) was in 30 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that XPEV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 26 hedge funds in our database with XPEV holdings at the end of September.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 124 percentage points since March 2017 (see the details here).

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x 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. Now let’s take a glance at the recent hedge fund action surrounding XPeng Inc. (NYSE:XPEV).

Do Hedge Funds Think XPEV Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the third quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in XPEV a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Coatue Management was the largest shareholder of XPeng Inc. (NYSE:XPEV), with a stake worth $444.6 million reported as of the end of December. Trailing Coatue Management was D E Shaw, which amassed a stake valued at $114.6 million. Segantii Capital, Tiger Global Management LLC, and Citadel Investment Group 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 Segantii Capital allocated the biggest weight to XPeng Inc. (NYSE:XPEV), around 4.24% of its 13F portfolio. Coatue Management is also relatively very bullish on the stock, setting aside 1.66 percent of its 13F equity portfolio to XPEV.

There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as XPeng Inc. (NYSE:XPEV) but similarly valued. We will take a look at Ball Corporation (NYSE:BLL), Schlumberger Limited. (NYSE:SLB), Copart, Inc. (NASDAQ:CPRT), Datadog, Inc. (NASDAQ:DDOG), Chunghwa Telecom Co., Ltd (NYSE:CHT), PACCAR Inc (NASDAQ:PCAR), and Bilibili Inc. (NASDAQ:BILI). This group of stocks’ market caps are similar to XPEV’s market cap.

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As you can see these stocks had an average of 39.6 hedge funds with bullish positions and the average amount invested in these stocks was $1410 million. That figure was $821 million in XPEV’s case. Datadog, Inc. (NASDAQ:DDOG) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 5 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 65.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately XPEV wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); XPEV investors were disappointed as the stock returned -20.6% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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