In this article we will analyze whether eXp World Holdings, Inc. (NASDAQ:EXPI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is EXPI a good stock to buy now? The smart money was in a bullish mood. The number of long hedge fund bets moved up by 3 in recent months. eXp World Holdings, Inc. (NASDAQ:EXPI) was in 14 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 11. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EXPI isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Roger Ibbotson of Zebra Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let's analyze the recent hedge fund action regarding eXp World Holdings, Inc. (NASDAQ:EXPI).
Do Hedge Funds Think EXPI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in EXPI a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of eXp World Holdings, Inc. (NASDAQ:EXPI), with a stake worth $50.2 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $16.5 million. Arrowstreet Capital, Phoenician Capital, and Millennium Management 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 8.74% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.44 percent of its 13F equity portfolio to EXPI.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the most outsized position in eXp World Holdings, Inc. (NASDAQ:EXPI). Two Sigma Advisors had $2.6 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also made a $1.8 million investment in the stock during the quarter. The other funds with brand new EXPI positions are Cliff Asness's AQR Capital Management, Paul Tudor Jones's Tudor Investment Corp, and Roger Ibbotson's Zebra Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as eXp World Holdings, Inc. (NASDAQ:EXPI) but similarly valued. These stocks are American States Water Co (NYSE:AWR), Bank OZK (NASDAQ:OZK), Synaptics Incorporated (NASDAQ:SYNA), WPX Energy Inc (NYSE:WPX), AMN Healthcare Services Inc (NYSE:AMN), Advanced Disposal Services, Inc. (NYSE:ADSW), and Spire Inc. (NYSE:SR). This group of stocks' market values are closest to EXPI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AWR,21,54964,1 OZK,20,178260,3 SYNA,23,370429,-5 WPX,29,225279,-8 AMN,16,72881,-5 ADSW,22,799197,-3 SR,20,48145,2 Average,21.6,249879,-2.1 [/table]
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $250 million. That figure was $111 million in EXPI's case. WPX Energy Inc (NYSE:WPX) is the most popular stock in this table. On the other hand AMN Healthcare Services Inc (NYSE:AMN) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks eXp World Holdings, Inc. (NASDAQ:EXPI) is even less popular than AMN. Our overall hedge fund sentiment score for EXPI is 38. 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. Hedge funds clearly dropped the ball on EXPI as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on EXPI as the stock returned 45.4% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
