Exelixis (EXEL): A Biotech Gem Backed by Renaissance Technologies?

Institutional investors like Jim Simons’ Renaissance Technologies often serve as bellwethers for market trends. The quant-driven hedge fund’s recent adjustments to its Exelixis, Inc. (EXEL) position—valued at $509.35 million as of December 2024—raise questions about whether this biotech stock remains a top pick. Let’s dissect Renaissance’s rationale, EXEL’s fundamentals, and whether its appeal justifies a buy today.

Renaissance’s Stake: A Strategic Shift or Enduring Conviction?

Renaissance Technologies’ Q4 2024 13F filing reveals it held 14.96 million shares of EXEL, representing 4.64% ownership and a $509 million stake. While this marks a 12.5% reduction in shares from its peak holding in early 2022, EXEL still ranked 9th among Renaissance’s top holdings—a testament to its enduring interest.

However, the reduction aligns with Renaissance’s broader pivot toward Asia-based AI stocks, as noted in its Q4 2024 filings. The fund slashed stakes in tech giants like Amazon (-74%) and Meta (-33%), while boosting positions in AI leaders such as NVIDIA (+1,175%). This suggests EXEL’s reduced weighting may reflect rebalancing rather than skepticism about its fundamentals.

EXEL’s Strong Financials and Clinical Momentum

Exelixis’ performance justifies Renaissance’s lingering interest:
- Revenue Growth: Q4 2024 revenue hit $567 million, a 18.2% year-over-year jump, with full-year revenue up 18.5% to $2.17 billion.
- Profitability: Non-GAAP net income nearly doubled to $593.6 million, driven by cost discipline and higher sales of its oncology drugs CABOMETYX and COMETRIQ.
- Pipeline Progress: Positive trial results for Zanzalintinib (metastatic colorectal cancer) and XL495 (advanced solid tumors) bolster EXEL’s long-term prospects. The CABOMETYX + Opdivo combination also showed improved progression-free survival in renal cell carcinoma trials.

Analysts project $1.86 billion in 2025 revenue (+15% growth) and a $1.00 EPS, implying a 46.8% upside from its February 2023 price target of $25.76.

Institutional Sentiment: Growing Interest Amid Renaissance’s Trim

Despite Renaissance’s reduced stake, 46 hedge funds held EXEL as of Q4 2024, up from 33 in Q3—a sign of growing institutional confidence. Riverwater Partners recently highlighted EXEL as a top pick, citing its “best-in-class” oncology pipeline and underappreciated valuation.

Risks and Considerations

• Portfolio Reallocation: Renaissance’s focus on AI stocks could signal a short-term headwind for EXEL.
• Pipeline Execution: EXEL’s success hinges on FDA approvals for Zanzalintinib and XL495, which face regulatory and competitive risks.
• Valuation: At a forward P/E of 30, EXEL is pricey relative to its 5-year average of 22, though its growth trajectory may justify this premium.

Conclusion: EXEL Deserves a Spot in Growth Portfolios

While Renaissance’s reduced stake in EXEL reflects its strategic pivot to AI, the biotech’s robust financials, expanding pipeline, and rising institutional support make it a compelling buy. Key data points:
- Revenue Growth: 18.5% annual growth over two years.
- Pipeline Catalysts: Two late-stage candidates with high unmet need in oncology.
- Ownership Trends: 46 hedge funds now hold EXEL, up 42% from a year ago.

Investors should weigh EXEL’s long-term growth potential against its valuation and Renaissance’s short-term reallocation. For those with a multi-year horizon, EXEL’s clinical and commercial strengths position it as a top-tier biotech—worthy of inclusion in growth-focused portfolios.

In short, Renaissance’s trimmed stake doesn’t negate EXEL’s value—it merely underscores the fund’s dynamic rebalancing. For most investors, EXEL remains a “buy” with a long view.