Should You Avoid Destination XL Group Inc (DXLG)?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Coliseum Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified DXLG as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Destination XL Group Inc (NASDAQ:DXLG) but similarly valued. We will take a look at TechTarget Inc (NASDAQ:TTGT), CRA International, Inc. (NASDAQ:CRAI), Zix Corporation (NASDAQ:ZIXI), and Invivo Therapeutics Holdings Corp (NASDAQ:NVIV). All of these stocks’ market caps are closest to DXLG’s market cap.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $89 million in DXLG’s case. CRA International, Inc. (NASDAQ:CRAI) and Zix Corporation (NASDAQ:ZIXI) are the most popular stock in this table. On the other hand Invivo Therapeutics Holdings Corp (NASDAQ:NVIV) is the least popular one with only four bullish hedge fund positions. Destination XL Group Inc (NASDAQ:DXLG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CRAI might be a better candidate to consider taking a long position in.

Disclosure: none