The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Exela Technologies, Inc. (NASDAQ:XELA).
Exela Technologies, Inc. (NASDAQ:XELA) was in 7 hedge funds' portfolios at the end of March. XELA has experienced an increase in hedge fund sentiment of late. There were 6 hedge funds in our database with XELA positions at the end of the previous quarter. Our calculations also showed that XELA isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's check out the latest hedge fund action regarding Exela Technologies, Inc. (NASDAQ:XELA).
How are hedge funds trading Exela Technologies, Inc. (NASDAQ:XELA)?
Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in XELA a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Nantahala Capital Management held the most valuable stake in Exela Technologies, Inc. (NASDAQ:XELA), which was worth $5.7 million at the end of the third quarter. On the second spot was Greenlight Capital which amassed $1.5 million worth of shares. Paloma Partners, Scoggin, and Antara Capital 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 Greenlight Capital allocated the biggest weight to Exela Technologies, Inc. (NASDAQ:XELA), around 0.22% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, earmarking 0.21 percent of its 13F equity portfolio to XELA.
Now, key hedge funds were breaking ground themselves. Antara Capital, managed by Himanshu Gulati, assembled the biggest position in Exela Technologies, Inc. (NASDAQ:XELA). Antara Capital had $0.1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Exela Technologies, Inc. (NASDAQ:XELA) but similarly valued. We will take a look at T.A.T. Technologies Ltd. (NASDAQ:TATT), Akarti Therapeutics PLC (NASDAQ:AKTX), Friedman Industries (NYSE:FRD), and Moleculin Biotech, Inc. (NASDAQ:MBRX). This group of stocks' market caps are similar to XELA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TATT,1,732,0 AKTX,1,188,0 FRD,1,2162,0 MBRX,2,792,-1 Average,1.25,969,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.25 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $8 million in XELA's case. Moleculin Biotech, Inc. (NASDAQ:MBRX) is the most popular stock in this table. On the other hand T.A.T. Technologies Ltd. (NASDAQ:TATT) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Exela Technologies, Inc. (NASDAQ:XELA) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on XELA as the stock returned 173.2% so far in Q2 (through June 10th) 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.
Disclosure: None. This article was originally published at Insider Monkey.