Were These Hedge Funds Wrong About Exelixis, Inc. (EXEL)?

Is Exelixis, Inc. (NASDAQ:EXEL) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Exelixis, Inc. (NASDAQ:EXEL) has seen an increase in support from the world’s most elite money managers of late. Exelixis, Inc. (NASDAQ:EXEL) was in 39 hedge funds’ portfolios at the end of June. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EXEL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most shareholders, hedge funds are assumed to be slow, outdated financial tools of years past. While there are more than 8000 funds in operation at the moment, We look at the crème de la crème of this group, around 850 funds. These hedge fund managers administer the majority of all hedge funds’ total asset base, and by observing their highest performing stock picks, Insider Monkey has identified a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Cliff Asness of AQR Capital Management

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 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now let’s take a look at the latest hedge fund action surrounding Exelixis, Inc. (NASDAQ:EXEL).

How are hedge funds trading Exelixis, Inc. (NASDAQ:EXEL)?

At Q2’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in EXEL a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is EXEL A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in Exelixis, Inc. (NASDAQ:EXEL), which was worth $546.2 million at the end of the third quarter. On the second spot was Farallon Capital which amassed $243.3 million worth of shares. AQR Capital Management, Polar Capital, and OrbiMed Advisors 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 Sectoral Asset Management allocated the biggest weight to Exelixis, Inc. (NASDAQ:EXEL), around 2.09% of its 13F portfolio. Farallon Capital is also relatively very bullish on the stock, designating 2 percent of its 13F equity portfolio to EXEL.

Now, some big names were breaking ground themselves. Adage Capital Management, managed by Phill Gross and Robert Atchinson, assembled the biggest position in Exelixis, Inc. (NASDAQ:EXEL). Adage Capital Management had $9.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $9 million investment in the stock during the quarter. The other funds with brand new EXEL positions are Ian Simm’s Impax Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Donald Sussman’s Paloma Partners.

Let’s now review hedge fund activity in other stocks similar to Exelixis, Inc. (NASDAQ:EXEL). We will take a look at Americold Realty Trust (NYSE:COLD), Formula One Group (NASDAQ:FWONA), Mohawk Industries, Inc. (NYSE:MHK), AGNC Investment Corp. (NASDAQ:AGNC), AptarGroup, Inc. (NYSE:ATR), Companhia de Saneamento Basico (NYSE:SBS), and WEX Inc (NYSE:WEX). All of these stocks’ market caps match EXEL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
COLD 29 290324 4
FWONA 17 248890 0
MHK 32 693381 -4
AGNC 37 458061 10
ATR 26 210604 6
SBS 10 270233 2
WEX 24 399174 -11
Average 25 367238 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $1171 million in EXEL’s case. AGNC Investment Corp. (NASDAQ:AGNC) is the most popular stock in this table. On the other hand Companhia de Saneamento Basico (NYSE:SBS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Exelixis, Inc. (NASDAQ:EXEL) is more popular among hedge funds. Our overall hedge fund sentiment score for EXEL is 90. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and still beat the market by 20.1 percentage points. Unfortunately EXEL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EXEL were disappointed as the stock returned -13.7% since the end of the second quarter (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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