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Should You Buy Exantas Capital Corp. (XAN)?

Is Exantas Capital Corp. (NYSE:XAN) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

Exantas Capital Corp. (NYSE:XAN) investors should be aware of an increase in enthusiasm from smart money lately. XAN was in 15 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with XAN positions at the end of the previous quarter. Our calculations also showed that xan isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES

Let’s review the recent hedge fund action regarding Exantas Capital Corp. (NYSE:XAN).

How have hedgies been trading Exantas Capital Corp. (NYSE:XAN)?

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards XAN over the last 13 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

No of Hedge Funds with XAN Positions

When looking at the institutional investors followed by Insider Monkey, J. Alan Reid, Jr.’s Forward Management has the largest position in Exantas Capital Corp. (NYSE:XAN), worth close to $8.9 million, accounting for 1.5% of its total 13F portfolio. The second largest stake is held by Ancora Advisors, managed by Frederick DiSanto, which holds a $7.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Derek C. Schrier’s Indaba Capital Management, David Costen Haley’s HBK Investments and Jim Simons’s Renaissance Technologies.

Now, some big names were leading the bulls’ herd. Indaba Capital Management, managed by Derek C. Schrier, initiated the most valuable position in Exantas Capital Corp. (NYSE:XAN). Indaba Capital Management had $6.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.7 million investment in the stock during the quarter. The other funds with brand new XAN positions are Alec Litowitz and Ross Laser’s Magnetar Capital and Roger Ibbotson’s Zebra Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Exantas Capital Corp. (NYSE:XAN) but similarly valued. We will take a look at Mesabi Trust (NYSE:MSB), Selecta Biosciences, Inc. (NASDAQ:SELB), GNC Holdings Inc (NYSE:GNC), and Landmark Infrastructure Partners LP (NASDAQ:LMRK). All of these stocks’ market caps are closest to XAN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSB 8 24634 1
SELB 8 35612 2
GNC 14 28702 -4
LMRK 4 4476 2
Average 8.5 23356 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $45 million in XAN’s case. GNC Holdings Inc (NYSE:GNC) is the most popular stock in this table. On the other hand Landmark Infrastructure Partners LP (NASDAQ:LMRK) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Exantas Capital Corp. (NYSE:XAN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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