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Did Hedge Funds Drop The Ball On Exelixis, Inc. (EXEL) ?

Reymerlyn Martin

Does Exelixis, Inc. (NASDAQ:EXEL) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

Is Exelixis, Inc. (NASDAQ:EXEL) the right investment to pursue these days? Money managers are becoming more confident. The number of bullish hedge fund positions increased by 1 recently. Our calculations also showed that EXEL 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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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.

MOORE GLOBAL INVESTMENTS

Let's review the latest hedge fund action regarding Exelixis, Inc. (NASDAQ:EXEL).

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

At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in EXEL a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

EXEL_apr2019

More specifically, AQR Capital Management was the largest shareholder of Exelixis, Inc. (NASDAQ:EXEL), with a stake worth $213 million reported as of the end of September. Trailing AQR Capital Management was Consonance Capital Management, which amassed a stake valued at $130.7 million. Renaissance Technologies, OrbiMed Advisors, and Farallon Capital were also very fond of the stock, giving the stock large weights in their portfolios.

As aggregate interest increased, key money managers have been driving this bullishness. Samlyn Capital, managed by Robert Pohly, established the most valuable position in Exelixis, Inc. (NASDAQ:EXEL). Samlyn Capital had $15.8 million invested in the company at the end of the quarter. Louis Bacon's Moore Global Investments also made a $3.1 million investment in the stock during the quarter. The other funds with new positions in the stock are George Zweig, Shane Haas and Ravi Chander's Signition LP, John Overdeck and David Siegel's Two Sigma Advisors, and Michael Gelband's ExodusPoint Capital.

Let's now take a look at hedge fund activity in other stocks similar to Exelixis, Inc. (NASDAQ:EXEL). We will take a look at Medical Properties Trust, Inc. (NYSE:MPW), LG Display Co Ltd. (NYSE:LPL), Enable Midstream Partners LP (NYSE:ENBL), and World Wrestling Entertainment, Inc. (NYSE:WWE). This group of stocks' market caps match EXEL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MPW,16,224506,6 LPL,5,19245,-1 ENBL,4,2646,0 WWE,34,697668,10 Average,14.75,236016,3.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $668 million in EXEL's case. World Wrestling Entertainment, Inc. (NYSE:WWE) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 4 bullish hedge fund positions. Exelixis, Inc. (NASDAQ:EXEL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on EXEL as the stock returned 24.3% and outperformed the market as well.

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

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