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This Metric Says You Are Smart to Sell XO Group Inc (XOXO): Zagg Inc (ZAGG), CSS Industries, Inc. (CSS)

XO Group Inc (NYSE:XOXO) was in 10 hedge funds’ portfolio at the end of December. XOXO has seen a decrease in hedge fund interest lately. There were 10 hedge funds in our database with XOXO holdings at the end of the previous quarter.


In the eyes of most stock holders, hedge funds are perceived as unimportant, outdated investment tools of the past. While there are over 8000 funds in operation at the moment, we at Insider Monkey look at the bigwigs of this group, close to 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by watching their highest performing picks, we have unearthed a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Just as integral, bullish insider trading activity is another way to parse down the investments you’re interested in. Obviously, there are plenty of motivations for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the useful potential of this tactic if you understand what to do (learn more here).

Keeping this in mind, we’re going to take a look at the key action encompassing XO Group Inc (NYSE:XOXO).

What does the smart money think about XO Group Inc (NYSE:XOXO)?

At the end of the fourth quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully.

Of the funds we track, Wallace Weitz’s Wallace R. Weitz & Co. had the most valuable position in XO Group Inc (NYSE:XOXO), worth close to $26 million, accounting for 1.1% of its total 13F portfolio. Coming in second is Nokomis Capital, managed by Brett Hendrickson, which held a $12 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Other peers with similar optimism include John W. Rogers’s Ariel Investments, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.

Seeing as XO Group Inc (NYSE:XOXO) has experienced falling interest from hedge fund managers, it’s safe to say that there was a specific group of hedge funds who were dropping their positions entirely heading into 2013. It’s worth mentioning that Israel Englander’s Millennium Management cut the largest position of all the hedgies we track, worth an estimated $0 million in stock. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading XO Group Inc (NYSE:XOXO)?

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time frame, XO Group Inc (NYSE:XOXO) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to XO Group Inc (NYSE:XOXO). These stocks are Zagg Inc (NASDAQ:ZAGG), CSS Industries, Inc. (NYSE:CSS), Odyssey Marine Exploration Inc (NASDAQ:OMEX), TravelCenters of America LLC (NYSEAMEX:TA), and West Marine, Inc. (NASDAQ:WMAR). This group of stocks are in the specialty retail, other industry and their market caps match XOXO’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Zagg Inc (NASDAQ:ZAGG) 8 0 0
CSS Industries, Inc. (NYSE:CSS) 4 1 3
Odyssey Marine Exploration Inc (NASDAQ:OMEX) 6 1 1
TravelCenters of America LLC (NYSEAMEX:TA) 8 0 0
West Marine, Inc. (NASDAQ:WMAR) 7 0 4

With the returns shown by our research, retail investors must always keep an eye on hedge fund and insider trading sentiment, and XO Group Inc (NYSE:XOXO) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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