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In this article we will take a look at whether hedge funds think Hexcel Corporation (NYSE:HXL) 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.
Is HXL stock a buy? Hexcel Corporation (NYSE:HXL) was in 25 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 30. HXL shareholders have witnessed an increase in enthusiasm from smart money of late. There were 20 hedge funds in our database with HXL positions at the end of the third quarter. Our calculations also showed that HXL isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 124 percentage points since March 2017 (see the details here).
Boykin Curry of Eagle Capital
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Do Hedge Funds Think HXL Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the third quarter of 2020. By comparison, 30 hedge funds held shares or bullish call options in HXL 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.
The largest stake in Hexcel Corporation (NYSE:HXL) was held by Eagle Capital Management, which reported holding $40.7 million worth of stock at the end of December. It was followed by Millennium Management with a $23.3 million position. Other investors bullish on the company included Two Sigma Advisors, Point72 Asset Management, and Sandbar Asset Management. In terms of the portfolio weights assigned to each position Sandbar Asset Management allocated the biggest weight to Hexcel Corporation (NYSE:HXL), around 1.82% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, earmarking 1.48 percent of its 13F equity portfolio to HXL.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Hexcel Corporation (NYSE:HXL) headfirst. Point72 Asset Management, managed by Steve Cohen, created the largest position in Hexcel Corporation (NYSE:HXL). Point72 Asset Management had $19.9 million invested in the company at the end of the quarter. Michael Cowley's Sandbar Asset Management also initiated a $11.4 million position during the quarter. The other funds with new positions in the stock are Brandon Haley's Holocene Advisors, Paul Marshall and Ian Wace's Marshall Wace LLP, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's also examine hedge fund activity in other stocks similar to Hexcel Corporation (NYSE:HXL). We will take a look at Bank OZK (NASDAQ:OZK), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), Park Hotels & Resorts Inc. (NYSE:PK), The Hain Celestial Group, Inc. (NASDAQ:HAIN), Kornit Digital Ltd. (NASDAQ:KRNT), Healthcare Realty Trust Inc (NYSE:HR), and Blackstone Mortgage Trust Inc (NYSE:BXMT). This group of stocks' market valuations are closest to HXL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OZK,20,260732,0 AJRD,36,802349,10 PK,13,112554,-4 HAIN,23,964598,2 KRNT,15,104173,-3 HR,23,172649,5 BXMT,17,141563,-7 Average,21,365517,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $167 million in HXL's case. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the most popular stock in this table. On the other hand Park Hotels & Resorts Inc. (NYSE:PK) is the least popular one with only 13 bullish hedge fund positions. Hexcel Corporation (NYSE:HXL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HXL is 61.1. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on HXL as the stock returned 18% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.