Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Accelerate Diagnostics Inc (NASDAQ:AXDX).
Is Accelerate Diagnostics Inc (NASDAQ:AXDX) ready to rally soon? Prominent investors are taking a bullish view. The number of long hedge fund positions moved up by 2 lately. Our calculations also showed that AXDX isn't among the 30 most popular stocks among hedge funds (click for Q1 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
[caption id="attachment_339344" align="aligncenter" width="392"] William Martin of Raging Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a glance at the recent hedge fund action regarding Accelerate Diagnostics Inc (NASDAQ:AXDX).
How have hedgies been trading Accelerate Diagnostics Inc (NASDAQ:AXDX)?
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in AXDX a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Birchview Capital was the largest shareholder of Accelerate Diagnostics Inc (NASDAQ:AXDX), with a stake worth $18.3 million reported as of the end of September. Trailing Birchview Capital was Selkirk Management, which amassed a stake valued at $2.9 million. Citadel Investment Group, Raging Capital Management, and D E Shaw 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 16.21% of its 13F portfolio. Selkirk Management is also relatively very bullish on the stock, dishing out 1.64 percent of its 13F equity portfolio to AXDX.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most outsized position in Accelerate Diagnostics Inc (NASDAQ:AXDX). Marshall Wace LLP had $0.3 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is Adam Usdan's Trellus Management Company.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Accelerate Diagnostics Inc (NASDAQ:AXDX) but similarly valued. These stocks are OMNOVA Solutions Inc. (NYSE:OMN), Uxin Limited (NASDAQ:UXIN), Aptose Biosciences Inc (NASDAQ:APTO), and Orion Engineered Carbons SA (NYSE:OEC). This group of stocks' market valuations resemble AXDX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OMN,20,89401,3 UXIN,5,12443,1 APTO,15,154997,-4 OEC,21,104910,3 Average,15.25,90438,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $25 million in AXDX's case. Orion Engineered Carbons SA (NYSE:OEC) is the most popular stock in this table. On the other hand Uxin Limited (NASDAQ:UXIN) is the least popular one with only 5 bullish hedge fund positions. Accelerate Diagnostics Inc (NASDAQ:AXDX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on AXDX as the stock returned 43.8% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.