Should I Buy Qualtrics International Inc. (XM)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Qualtrics International Inc. (NASDAQ:XM).

Is Qualtrics International Inc. (NASDAQ:XM) a great stock to buy now? Money managers were getting more optimistic. The number of bullish hedge fund positions rose by 37 recently. Qualtrics International Inc. (NASDAQ:XM) was in 37 hedge funds’ portfolios at the end of March. Our calculations also showed that XM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

At the moment there are a multitude of metrics market participants can use to analyze their holdings. A couple of the most useful metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace their index-focused peers by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. 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 homepage. Now let’s take a glance at the latest hedge fund action encompassing Qualtrics International Inc. (NASDAQ:XM).

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

At Q1’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 37 from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in XM over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Silver Lake Partners was the largest shareholder of Qualtrics International Inc. (NASDAQ:XM), with a stake worth $741.1 million reported as of the end of March. Trailing Silver Lake Partners was Alkeon Capital Management, which amassed a stake valued at $104.2 million. VGI Partners, 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 0 allocated the biggest weight to Qualtrics International Inc. (NASDAQ:XM), around 7.39% of its 13F portfolio. 0 is also relatively very bullish on the stock, setting aside 5.88 percent of its 13F equity portfolio to XM.

As aggregate interest increased, key money managers have jumped into Qualtrics International Inc. (NASDAQ:XM) headfirst. Silver Lake Partners, managed by Jim Davidson, Dave Roux and Glenn Hutchins, initiated the most valuable position in Qualtrics International Inc. (NASDAQ:XM). Silver Lake Partners had $741.1 million invested in the company at the end of the quarter. Panayotis Takis Sparaggis’s Alkeon Capital Management also made a $104.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert M. P. Luciano’s VGI Partners, Chase Coleman’s Tiger Global Management LLC, and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Qualtrics International Inc. (NASDAQ:XM) but similarly valued. These stocks are Jacobs Engineering Group Inc. (NYSE:J), Avantor, Inc. (NYSE:AVTR), QuantumScape Corporation (NYSE:QS), Sun Communities Inc (NYSE:SUI), Genuine Parts Company (NYSE:GPC), The Liberty SiriusXM Group (NASDAQ:LSXMA), and Smith & Nephew plc (NYSE:SNN). This group of stocks’ market caps are similar to XM’s market cap.

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As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $961 million. That figure was $1247 million in XM’s case. Avantor, Inc. (NYSE:AVTR) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 11 bullish hedge fund positions. Qualtrics International Inc. (NASDAQ:XM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XM is 66.2. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on XM as the stock returned 14.4% since the end of Q1 (through 6/25) 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.