U.S. markets closed

Hedge Funds Are Souring On eXp World Holdings, Inc. (EXPI)

Debasis Saha

In this article we will take a look at whether hedge funds think eXp World Holdings, Inc. (NASDAQ:EXPI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

eXp World Holdings, Inc. (NASDAQ:EXPI) has experienced a decrease in support from the world's most elite money managers in recent months. Our calculations also showed that EXPI 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_26340" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]

CITADEL INVESTMENT GROUP

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. Now let's take a peek at the key hedge fund action regarding eXp World Holdings, Inc. (NASDAQ:EXPI).

How have hedgies been trading eXp World Holdings, Inc. (NASDAQ:EXPI)?

At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EXPI over the last 18 quarters. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Is EXPI A Good Stock To Buy?

Among these funds, Phoenician Capital held the most valuable stake in eXp World Holdings, Inc. (NASDAQ:EXPI), which was worth $6.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $3.4 million worth of shares. Intrinsic Edge Capital, Marshall Wace LLP, and Citadel Investment Group 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 Phoenician Capital allocated the biggest weight to eXp World Holdings, Inc. (NASDAQ:EXPI), around 13.36% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to EXPI.

Seeing as eXp World Holdings, Inc. (NASDAQ:EXPI) has experienced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who were dropping their positions entirely by the end of the first quarter. At the top of the heap, C. Jonathan Gattman's Cloverdale Capital Management said goodbye to the largest stake of the "upper crust" of funds monitored by Insider Monkey, comprising about $3 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund cut about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds by the end of the first quarter.

Let's now take a look at hedge fund activity in other stocks similar to eXp World Holdings, Inc. (NASDAQ:EXPI). These stocks are 111, Inc. (NASDAQ:YI), Northfield Bancorp Inc (NASDAQ:NFBK), Harsco Corporation (NYSE:HSC), and Forrester Research, Inc. (NASDAQ:FORR). This group of stocks' market valuations resemble EXPI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YI,3,7044,1 NFBK,6,28889,1 HSC,16,64647,-5 FORR,8,55803,-2 Average,8.25,39096,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $14 million in EXPI's case. Harsco Corporation (NYSE:HSC) is the most popular stock in this table. On the other hand 111, Inc. (NASDAQ:YI) is the least popular one with only 3 bullish hedge fund positions. eXp World Holdings, Inc. (NASDAQ:EXPI) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on EXPI as the stock returned 38.1% during the second quarter and outperformed the market by an even larger margin.

[company-follow-email id=1495932][/company-follow-email]

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

Related Content