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Is Xylem Inc (XYL) a Good Buy?

Due to the fact that Xylem Inc (NYSE:XYL) has experienced bearish sentiment from hedge fund managers, we can see that there was a specific group of hedge funds that slashed their positions entirely last quarter. Intriguingly, Jim Simons’ Renaissance Technologies dropped the biggest stake of the 700 funds monitored by Insider Monkey, worth about $9.7 million in stock, and Lawrence Sapanski’s Scoria Capital was right behind this move, as the fund dropped about $4.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 5 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Xylem Inc (NYSE:XYL) but similarly valued. These stocks are SVB Financial Group (NASDAQ:SIVB), Macquarie Infrastructure Company LLC (NYSE:MIC), Domino’s Pizza, Inc. (NYSE:DPZ), and NiSource Inc. (NYSE:NI). All of these stocks’ market caps match XYL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SIVB 34 454373 4
MIC 69 1479032 0
DPZ 28 1024237 5
NI 23 489881 -7

As you can see these stocks had an average of 38.5 hedge funds with bullish positions and the average amount invested in these stocks was $862 million. That figure was $488 million in XYL’s case. Macquarie Infrastructure Company LLC (NYSE:MIC) is the most popular stock in this table. On the other hand NiSource Inc. (NYSE:NI) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Xylem Inc (NYSE:XYL) is as less popular as NI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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