Is XenoPort, Inc. (NASDAQ:XNPT) a healthy stock for your portfolio? Money managers are in a pessimistic mood. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience In the eyes of most stock holders, hedge funds are seen as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the top tier of this group, close to 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by tracking their highest performing picks, we have discovered a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here). Equally as integral, bullish insider trading activity is a second way to parse down the marketplace. There are a number of stimuli for an insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the impressive potential of this method if you know where to look (learn more here). With these “truths” under our belt, let’s take a gander at the key action encompassing XenoPort, Inc. (NASDAQ:XNPT).
What does the smart money think about XenoPort, Inc. (NASDAQ:XNPT)?
At the end of the first quarter, a total of 13 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully. When looking at the hedgies we track, Samuel Isaly’s OrbiMed Advisors had the most valuable position in XenoPort, Inc. (NASDAQ:XNPT), worth close to $28.3 million, accounting for 0.7% of its total 13F portfolio. On OrbiMed Advisors’s heels is James E. Flynn of Deerfield Management, with a $21.5 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Julian Baker and Felix Baker’s Baker Bros. Advisors, D. E. Shaw’s D E Shaw and SAC Subsidiary’s CR Intrinsic Investors. Due to the fact that XenoPort, Inc. (NASDAQ:XNPT) has faced falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers that decided to sell off their positions entirely heading into Q2. At the top of the heap, Phill Gross and Robert Atchinson’s Adage Capital Management dumped the largest investment of the “upper crust” of funds we monitor, worth close to $3 million in stock., and Sean Cullinan of Point State Capital was right behind this move, as the fund dropped about $1.6 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in XenoPort, Inc. (NASDAQ:XNPT)
Insider purchases made by high-level executives is best served when the company in question has experienced transactions within the past half-year. Over the latest 180-day time frame, XenoPort, Inc. (NASDAQ:XNPT) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here). Let’s also examine hedge fund and insider activity in other stocks similar to XenoPort, Inc. (NASDAQ:XNPT). These stocks are Obagi Medical Products, Inc. (NASDAQ:OMPI), Vical Incorporated (NASDAQ:VICL), Osiris Therapeutics, Inc. (NASDAQ:OSIR), Novavax, Inc. (NASDAQ:NVAX), and 3SBio Inc. (ADR) (NASDAQ:SSRX). This group of stocks are the members of the biotechnology industry and their market caps resemble XNPT’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Obagi Medical Products, Inc. (NASDAQ:OMPI)||16||0||0|
|Vical Incorporated (NASDAQ:VICL)||8||4||0|
|Osiris Therapeutics, Inc. (NASDAQ:OSIR)||4||1||3|
|Novavax, Inc. (NASDAQ:NVAX)||7||1||1|
|3SBio Inc. (ADR) (NASDAQ:SSRX)||11||0||0|
With the returns exhibited by our studies, everyday investors must always watch hedge fund and insider trading activity, and XenoPort, Inc. (NASDAQ:XNPT) applies perfectly to this mantra. Click here to learn why you should track hedge funds