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How Did Hedge Funds’ Exelixis, Inc. (EXEL) Bets Fare?

·5 min read

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Exelixis, Inc. (NASDAQ:EXEL) and determine whether hedge funds had an edge regarding this stock.

Exelixis, Inc. (NASDAQ:EXEL) shareholders have witnessed a decrease in hedge fund interest lately. Exelixis, Inc. (NASDAQ:EXEL) was in 30 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 39. There were 33 hedge funds in our database with EXEL holdings at the end of June. Our calculations also showed that EXEL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let's view the recent hedge fund action encompassing Exelixis, Inc. (NASDAQ:EXEL).

Peter Algert of Algert Global

Do Hedge Funds Think EXEL Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 34 hedge funds with a bullish position in EXEL a year ago. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the biggest position in Exelixis, Inc. (NASDAQ:EXEL), worth close to $371 million, amounting to 0.5% of its total 13F portfolio. On Renaissance Technologies's heels is Farallon Capital, holding a $204.2 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Brian Ashford-Russell and Tim Woolley's Polar Capital, John Overdeck and David Siegel's Two Sigma Advisors and Steve Cohen's Point72 Asset Management. In terms of the portfolio weights assigned to each position Great Point Partners allocated the biggest weight to Exelixis, Inc. (NASDAQ:EXEL), around 7.51% of its 13F portfolio. Farallon Capital is also relatively very bullish on the stock, earmarking 1.03 percent of its 13F equity portfolio to EXEL.

Due to the fact that Exelixis, Inc. (NASDAQ:EXEL) has witnessed declining sentiment from the smart money, we can see that there exists a select few hedge funds that slashed their entire stakes by the end of the third quarter. Interestingly, Dmitry Balyasny's Balyasny Asset Management dumped the largest stake of all the hedgies followed by Insider Monkey, comprising close to $3.9 million in stock, and Ian Simm's Impax Asset Management was right behind this move, as the fund said goodbye to about $2.4 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds by the end of the third quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Exelixis, Inc. (NASDAQ:EXEL) but similarly valued. We will take a look at Beyond Meat, Inc. (NASDAQ:BYND), Prosperity Bancshares, Inc. (NYSE:PB), Digital Turbine Inc (NASDAQ:APPS), OGE Energy Corp. (NYSE:OGE), J2 Global Inc (NASDAQ:JCOM), Appian Corporation (NASDAQ:APPN), and Huntsman Corporation (NYSE:HUN). All of these stocks' market caps resemble EXEL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BYND,16,114044,-1 PB,16,102630,0 APPS,19,209159,-11 OGE,21,224687,4 JCOM,20,410631,-2 APPN,20,610244,7 HUN,26,984953,-1 Average,19.7,379478,-0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $379 million. That figure was $897 million in EXEL's case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand Beyond Meat, Inc. (NASDAQ:BYND) is the least popular one with only 16 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 75.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, EXEL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EXEL were disappointed as the stock returned -14.4% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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