The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards XPO Logistics Inc (NYSE:XPO).
Is XPO a good stock to buy now? XPO Logistics Inc (NYSE:XPO) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. XPO Logistics Inc (NYSE:XPO) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 47. Our calculations also showed that XPO 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In the eyes of most stock holders, hedge funds are viewed as slow, outdated investment vehicles of the past. While there are greater than 8000 funds with their doors open at present, Our experts look at the moguls of this group, approximately 850 funds. These hedge fund managers have their hands on most of the smart money’s total asset base, and by watching their top investments, Insider Monkey has spotted many investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Donald Sussman of Paloma Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. With all of this in mind we’re going to analyze the fresh hedge fund action surrounding XPO Logistics Inc (NYSE:XPO).
Do Hedge Funds Think XPO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the second quarter of 2020. By comparison, 26 hedge funds held shares or bullish call options in XPO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Orbis Investment Management, managed by William B. Gray, holds the biggest position in XPO Logistics Inc (NYSE:XPO). Orbis Investment Management has a $1.3697 billion position in the stock, comprising 10.8% of its 13F portfolio. On Orbis Investment Management’s heels is Spruce House Investment Management, led by Zachary Sternberg and Benjamin Stein, holding a $357.5 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Andrew Wellington and Jeff Keswin’s Lyrical Asset Management, Farhad Nanji and Michael DeMichele’s MFN Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Lansing Management allocated the biggest weight to XPO Logistics Inc (NYSE:XPO), around 12.61% of its 13F portfolio. Orbis Investment Management is also relatively very bullish on the stock, setting aside 10.78 percent of its 13F equity portfolio to XPO.
Seeing as XPO Logistics Inc (NYSE:XPO) has faced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their entire stakes last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest investment of all the hedgies watched by Insider Monkey, valued at an estimated $33.9 million in stock. Ken Grossman and Glen Schneider’s fund, SG Capital Management, also dumped its stock, about $18.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to XPO Logistics Inc (NYSE:XPO). We will take a look at AGNC Investment Corp. (NASDAQ:AGNC), Iron Mountain Incorporated (NYSE:IRM), Magellan Midstream Partners, L.P. (NYSE:MMP), Amedisys Inc (NASDAQ:AMED), Mylan Inc. (NASDAQ:MYL), Chemed Corporation (NYSE:CHE), and Banco de Chile (NYSE:BCH). This group of stocks’ market values are similar to XPO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGNC | 32 | 382410 | -5 |
| IRM | 25 | 112125 | 3 |
| MMP | 20 | 101183 | 5 |
| AMED | 31 | 343564 | 1 |
| MYL | 48 | 1749763 | 2 |
| CHE | 34 | 417170 | 8 |
| BCH | 4 | 34650 | 1 |
| Average | 27.7 | 448695 | 2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.7 hedge funds with bullish positions and the average amount invested in these stocks was $449 million. That figure was $2338 million in XPO’s case. Mylan Inc. (NASDAQ:MYL) is the most popular stock in this table. On the other hand Banco de Chile (NYSE:BCH) is the least popular one with only 4 bullish hedge fund positions. XPO Logistics Inc (NYSE:XPO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XPO is 68.7. 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 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on XPO as the stock returned 40.7% since the end of Q3 (through 12/18) 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.
