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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of XPeng Inc. (NYSE:XPEV) based on that data.
Is XPEV a good stock to buy? XPeng Inc. (NYSE:XPEV) shareholders have witnessed a decrease in hedge fund interest recently. XPeng Inc. (NYSE:XPEV) was in 19 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 30. There were 30 hedge funds in our database with XPEV positions at the end of the fourth quarter. Our calculations also showed that XPEV isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Philippe Laffont of Coatue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let's take a look at the latest hedge fund action surrounding XPeng Inc. (NYSE:XPEV).
Do Hedge Funds Think XPEV Is A Good Stock To Buy Now?
At the end of March, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -37% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in XPEV a year ago. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Philippe Laffont's Coatue Management has the largest position in XPeng Inc. (NYSE:XPEV), worth close to $596.6 million, accounting for 3.3% of its total 13F portfolio. Sitting at the No. 2 spot is Andreas Halvorsen of Viking Global, with a $152.1 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other peers with similar optimism comprise Simon Sadler's Segantii Capital, and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to XPeng Inc. (NYSE:XPEV), around 3.27% of its 13F portfolio. 0 is also relatively very bullish on the stock, earmarking 2.68 percent of its 13F equity portfolio to XPEV.
Seeing as XPeng Inc. (NYSE:XPEV) has faced declining sentiment from the smart money, we can see that there lies a certain "tier" of funds who sold off their entire stakes in the first quarter. Interestingly, Ben Jacobs's Anomaly Capital Management cut the biggest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $9.7 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund cut about $6.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 11 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to XPeng Inc. (NYSE:XPEV). We will take a look at Zebra Technologies Corporation (NASDAQ:ZBRA), Ryanair Holdings plc (NASDAQ:RYAAY), Banco Santander (Brasil) SA (NYSE:BSBR), Hormel Foods Corporation (NYSE:HRL), DTE Energy Company (NYSE:DTE), Carnival Corporation & plc (NYSE:CCL), and AvalonBay Communities Inc (NYSE:AVB). This group of stocks' market caps match XPEV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZBRA,35,1163526,-6 RYAAY,14,568235,-9 BSBR,5,3887,-1 HRL,26,483859,-5 DTE,26,205605,-3 CCL,44,593600,-3 AVB,40,630728,8 Average,27.1,521349,-2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $521 million. That figure was $976 million in XPEV's case. Carnival Corporation & plc (NYSE:CCL) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 5 bullish hedge fund positions. XPeng Inc. (NYSE:XPEV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for XPEV is 30.9. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately XPEV wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); XPEV investors were disappointed as the stock returned 6.9% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.