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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Hexcel Corporation (NYSE:HXL).
Hexcel Corporation (NYSE:HXL) investors should pay attention to a decrease in enthusiasm from smart money recently. Our calculations also showed that HXL 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.
To the average investor there are dozens of methods stock traders put to use to appraise publicly traded companies. Some of the most under-the-radar methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the market by a healthy margin (see the details here).
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Boykin Curry of Eagle Capital[/caption]
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 stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind we're going to analyze the key hedge fund action surrounding Hexcel Corporation (NYSE:HXL).
How are hedge funds trading Hexcel Corporation (NYSE:HXL)?
At Q1's end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the fourth quarter of 2019. By comparison, 25 hedge funds held shares or bullish call options in HXL a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hexcel Corporation (NYSE:HXL) was held by Eagle Capital Management, which reported holding $78.4 million worth of stock at the end of September. It was followed by Alpine Associates with a $19.8 million position. Other investors bullish on the company included Two Sigma Advisors, LMR Partners, and Renaissance Technologies. In terms of the portfolio weights assigned to each position LMR Partners allocated the biggest weight to Hexcel Corporation (NYSE:HXL), around 1.28% of its 13F portfolio. Alpine Associates is also relatively very bullish on the stock, dishing out 0.79 percent of its 13F equity portfolio to HXL.
Judging by the fact that Hexcel Corporation (NYSE:HXL) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedgies that decided to sell off their positions entirely by the end of the first quarter. Interestingly, Cliff Asness's AQR Capital Management dropped the biggest position of the "upper crust" of funds tracked by Insider Monkey, worth close to $14 million in stock. Noam Gottesman's fund, GLG Partners, also said goodbye to its stock, about $8.1 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds by the end of the first quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Hexcel Corporation (NYSE:HXL) but similarly valued. We will take a look at Strayer Education Inc (NASDAQ:STRA), Grocery Outlet Holding Corp. (NASDAQ:GO), SiteOne Landscape Supply, Inc. (NYSE:SITE), and Intercorp Financial Services Inc. (NYSE:IFS). All of these stocks' market caps resemble HXL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STRA,13,228871,0 GO,17,102998,3 SITE,19,86260,4 IFS,2,34394,0 Average,12.75,113131,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $187 million in HXL's case. SiteOne Landscape Supply, Inc. (NYSE:SITE) is the most popular stock in this table. On the other hand Intercorp Financial Services Inc. (NYSE:IFS) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Hexcel Corporation (NYSE:HXL) 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 gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately HXL wasn't nearly as popular as these 10 stocks and hedge funds that were betting on HXL were disappointed as the stock returned -2.7% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.