As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about XpresSpa Group, Inc. (NASDAQ:XSPA).
XpresSpa Group, Inc. (NASDAQ:XSPA) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that XSPA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Pixelworks, Inc. (NASDAQ:PXLW), ESSA Bancorp, Inc. (NASDAQ:ESSA), and Lincoln Educational Services Corporation (NASDAQ:LINC) to gather more data points.
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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Algert of Algert Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 fresh hedge fund action encompassing XpresSpa Group, Inc. (NASDAQ:XSPA).
Do Hedge Funds Think XSPA Is A Good Stock To Buy Now?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards XSPA over the last 23 quarters. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in XpresSpa Group, Inc. (NASDAQ:XSPA) was held by Fir Tree, which reported holding $1.8 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $0.9 million position. Other investors bullish on the company included Citadel Investment Group, Prelude Capital (previously Springbok Capital), and Algert Global. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to XpresSpa Group, Inc. (NASDAQ:XSPA), around 0.07% of its 13F portfolio. 0 is also relatively very bullish on the stock, designating 0.04 percent of its 13F equity portfolio to XSPA.
Seeing as XpresSpa Group, Inc. (NASDAQ:XSPA) has experienced a decline in interest from the smart money, logic holds that there is a sect of fund managers who sold off their entire stakes in the first quarter. At the top of the heap, Hal Mintz's Sabby Capital cut the largest investment of the 750 funds monitored by Insider Monkey, totaling close to $4 million in stock, and Sander Gerber's Hudson Bay Capital Management was right behind this move, as the fund said goodbye to about $0.2 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to XpresSpa Group, Inc. (NASDAQ:XSPA). We will take a look at Pixelworks, Inc. (NASDAQ:PXLW), ESSA Bancorp, Inc. (NASDAQ:ESSA), Lincoln Educational Services Corporation (NASDAQ:LINC), Caledonia Mining Corporation Plc (NYSE:CMCL), Milestone Pharmaceuticals Inc. (NASDAQ:MIST), Celcuity Inc. (NASDAQ:CELC), and Intevac, Inc. (NASDAQ:IVAC). All of these stocks' market caps are similar to XSPA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PXLW,8,6795,-1 ESSA,2,11114,-1 LINC,12,51718,-3 CMCL,1,259,-3 MIST,8,51982,0 CELC,6,9274,5 IVAC,11,21628,6 Average,6.9,21824,0.4 [/table]
As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $1 million in XSPA's case. Lincoln Educational Services Corporation (NASDAQ:LINC) is the most popular stock in this table. On the other hand Caledonia Mining Corporation Plc (NYSE:CMCL) is the least popular one with only 1 bullish hedge fund positions. XpresSpa Group, Inc. (NASDAQ:XSPA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for XSPA is 57.7. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately XSPA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); XSPA investors were disappointed as the stock returned -11.4% since the end of March (through 6/25) 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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