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Is Accelerate Diagnostics Inc (AXDX) Going to Burn These Hedge Funds?

Reymerlyn Martin

Is Accelerate Diagnostics Inc (NASDAQ:AXDX) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Accelerate Diagnostics Inc (NASDAQ:AXDX) has seen a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that AXDX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

If you'd ask most stock holders, hedge funds are perceived as worthless, old investment vehicles of yesteryear. While there are more than 8000 funds trading at present, We hone in on the upper echelon of this group, approximately 750 funds. These investment experts administer the lion's share of the smart money's total capital, and by following their inimitable equity investments, Insider Monkey has figured out a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_339344" align="aligncenter" width="2480"] William Martin of Raging Capital Management[/caption]

William Martin Raging Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to take a gander at the key hedge fund action encompassing Accelerate Diagnostics Inc (NASDAQ:AXDX).

What have hedge funds been doing with Accelerate Diagnostics Inc (NASDAQ:AXDX)?

Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in AXDX a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Birchview Capital held the most valuable stake in Accelerate Diagnostics Inc (NASDAQ:AXDX), which was worth $40.6 million at the end of the third quarter. On the second spot was Selkirk Management which amassed $6.5 million worth of shares. Citadel Investment Group, Raging Capital Management, and Springbok Capital 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 Birchview Capital allocated the biggest weight to Accelerate Diagnostics Inc (NASDAQ:AXDX), around 27.02% of its 13F portfolio. Selkirk Management is also relatively very bullish on the stock, dishing out 3.66 percent of its 13F equity portfolio to AXDX.

Seeing as Accelerate Diagnostics Inc (NASDAQ:AXDX) has witnessed falling interest from hedge fund managers, it's safe to say that there was a specific group of funds who sold off their entire stakes last quarter. Intriguingly, Mark Coe's Intrinsic Edge Capital dumped the biggest position of the 750 funds monitored by Insider Monkey, worth an estimated $5.5 million in stock. Sculptor Capital also cut its stock, about $1.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.

Let's also examine hedge fund activity in other stocks similar to Accelerate Diagnostics Inc (NASDAQ:AXDX). These stocks are MRC Global Inc (NYSE:MRC), The Buckle, Inc. (NYSE:BKE), Orthofix Medical Inc. (NASDAQ:OFIX), and Tenneco Inc (NYSE:TEN). This group of stocks' market caps match AXDX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MRC,12,73329,-3 BKE,12,43909,-2 OFIX,13,69122,0 TEN,13,130095,1 Average,12.5,79114,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $51 million in AXDX's case. Orthofix International NV (NASDAQ:OFIX) is the most popular stock in this table. On the other hand MRC Global Inc (NYSE:MRC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Accelerate Diagnostics Inc (NASDAQ:AXDX) is even less popular than MRC. Hedge funds dodged a bullet by taking a bearish stance towards AXDX. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AXDX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AXDX investors were disappointed as the stock returned -19.5% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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