Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors' favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds' top consensus picks. This year hedge funds' top 20 stock picks outperformed the S&P 500 Index by 4 percentage points through September 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is Xilinx, Inc. (NASDAQ:XLNX) undervalued? Investors who are in the know are turning less bullish. The number of bullish hedge fund bets were trimmed by 17 lately. Our calculations also showed that XLNX isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most investors, hedge funds are viewed as unimportant, outdated financial vehicles of years past. While there are over 8000 funds trading today, We hone in on the upper echelon of this group, approximately 750 funds. These hedge fund managers manage the majority of the smart money's total asset base, and by keeping an eye on their first-class investments, Insider Monkey has discovered a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the key hedge fund action encompassing Xilinx, Inc. (NASDAQ:XLNX).
Hedge fund activity in Xilinx, Inc. (NASDAQ:XLNX)
At the end of the second quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the first quarter of 2019. On the other hand, there were a total of 28 hedge funds with a bullish position in XLNX a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Xilinx, Inc. (NASDAQ:XLNX), which was worth $316.4 million at the end of the second quarter. On the second spot was AQR Capital Management which amassed $315.6 million worth of shares. Moreover, Alkeon Capital Management, Citadel Investment Group, and Two Sigma Advisors were also bullish on Xilinx, Inc. (NASDAQ:XLNX), allocating a large percentage of their portfolios to this stock.
Seeing as Xilinx, Inc. (NASDAQ:XLNX) has faced declining sentiment from the smart money, logic holds that there is a sect of fund managers that decided to sell off their entire stakes by the end of the second quarter. At the top of the heap, Alex Sacerdote's Whale Rock Capital Management said goodbye to the largest position of the 750 funds monitored by Insider Monkey, totaling close to $161.7 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dropped about $104.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 17 funds by the end of the second quarter.
Let's check out hedge fund activity in other stocks similar to Xilinx, Inc. (NASDAQ:XLNX). These stocks are Southern Copper Corporation (NYSE:SCCO), Amphenol Corporation (NYSE:APH), Hilton Worldwide Holdings Inc (NYSE:HLT), and JD.Com Inc (NASDAQ:JD). This group of stocks' market values match XLNX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCCO,15,202622,2 APH,25,504483,0 HLT,44,4372251,-7 JD,45,5156730,-3 Average,32.25,2559022,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $2559 million. That figure was $1146 million in XLNX's case. JD.Com Inc (NASDAQ:JD) is the most popular stock in this table. On the other hand Southern Copper Corporation (NYSE:SCCO) is the least popular one with only 15 bullish hedge fund positions. Xilinx, Inc. (NASDAQ:XLNX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately XLNX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on XLNX were disappointed as the stock returned -18.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
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