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How Did Hedge Funds’ Xenon Pharmaceuticals Inc (XENE) Bets Fare?

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The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Xenon Pharmaceuticals Inc (NASDAQ:XENE) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Is Xenon Pharmaceuticals Inc (NASDAQ:XENE) a healthy stock for your portfolio? The smart money was betting on the stock. The number of bullish hedge fund bets improved by 7 in recent months. Xenon Pharmaceuticals Inc (NASDAQ:XENE) was in 35 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that XENE 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 analyze the recent hedge fund action encompassing Xenon Pharmaceuticals Inc (NASDAQ:XENE).

Joseph Edelman of Perceptive Advisors
Joseph Edelman of Perceptive Advisors

Joseph Edelman of Perceptive Advisors

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

At the end of September, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in XENE 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.

Among these funds, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in Xenon Pharmaceuticals Inc (NASDAQ:XENE), which was worth $55.8 million at the end of the third quarter. On the second spot was Perceptive Advisors which amassed $30.9 million worth of shares. Biotechnology Value Fund / BVF Inc, Driehaus Capital, and Adage Capital Management 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 Ghost Tree Capital allocated the biggest weight to Xenon Pharmaceuticals Inc (NASDAQ:XENE), around 3.53% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, dishing out 2.49 percent of its 13F equity portfolio to XENE.

Now, key money managers were breaking ground themselves. Great Point Partners, managed by Jeffrey Jay and David Kroin, created the largest position in Xenon Pharmaceuticals Inc (NASDAQ:XENE). Great Point Partners had $10.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $4.1 million investment in the stock during the quarter. The following funds were also among the new XENE investors: Prashanth Jayaram's Tri Locum Partners, Michael Rockefeller and KarláKroeker's Woodline Partners, and Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Xenon Pharmaceuticals Inc (NASDAQ:XENE) but similarly valued. We will take a look at Peapack-Gladstone Financial Corp (NASDAQ:PGC), Glatfelter Corp (NYSE:GLT), Adagene Inc. (NASDAQ:ADAG), Newtek Business Services Corp (NASDAQ:NEWT), GAN Limited (NASDAQ:GAN), Sabine Royalty Trust (NYSE:SBR), and TORM plc (NASDAQ:TRMD). This group of stocks' market values are closest to XENE's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PGC,14,64110,0 GLT,10,53605,-2 ADAG,5,10207,-2 NEWT,5,7827,1 GAN,16,55519,1 SBR,4,17749,-1 TRMD,6,417582,0 Average,8.6,89514,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $323 million in XENE's case. GAN Limited (NASDAQ:GAN) is the most popular stock in this table. On the other hand Sabine Royalty Trust (NYSE:SBR) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Xenon Pharmaceuticals Inc (NASDAQ:XENE) is more popular among hedge funds. Our overall hedge fund sentiment score for XENE 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 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on XENE as the stock returned 77.5% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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