We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of LexinFintech Holdings Ltd. (NASDAQ:LX).
LexinFintech Holdings Ltd. (NASDAQ:LX) has seen an increase in hedge fund sentiment of late. LX was in 13 hedge funds' portfolios at the end of the first quarter of 2019. There were 4 hedge funds in our database with LX positions at the end of the previous quarter. Our calculations also showed that LX 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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
We're going to go over the new hedge fund action encompassing LexinFintech Holdings Ltd. (NASDAQ:LX).
Hedge fund activity in LexinFintech Holdings Ltd. (NASDAQ:LX)
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 225% from one quarter earlier. By comparison, 1 hedge funds held shares or bullish call options in LX a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Marshall Wace LLP was the largest shareholder of LexinFintech Holdings Ltd. (NASDAQ:LX), with a stake worth $6 million reported as of the end of March. Trailing Marshall Wace LLP was Arrowstreet Capital, which amassed a stake valued at $5.3 million. Renaissance Technologies, GLG Partners, and Sensato Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in LexinFintech Holdings Ltd. (NASDAQ:LX). Marshall Wace LLP had $6 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $3.3 million position during the quarter. The other funds with new positions in the stock are Ernest Chow and Jonathan Howe's Sensato Capital Management, D. E. Shaw's D E Shaw, and Israel Englander's Millennium Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as LexinFintech Holdings Ltd. (NASDAQ:LX) but similarly valued. These stocks are ESCO Technologies Inc. (NYSE:ESE), Acushnet Holdings Corp. (NYSE:GOLF), NMI Holdings Inc (NASDAQ:NMIH), and Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR). This group of stocks' market values are closest to LX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESE,7,5230,2 GOLF,13,20118,2 NMIH,15,229247,-1 ARWR,16,172031,3 Average,12.75,106657,1.5 [/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 $107 million. That figure was $25 million in LX's case. Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) is the most popular stock in this table. On the other hand ESCO Technologies Inc. (NYSE:ESE) is the least popular one with only 7 bullish hedge fund positions. LexinFintech Holdings Ltd. (NASDAQ:LX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on LX as the stock returned 9.5% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.