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Is ACLS A Good Stock To Buy Now?

·6 min read

In this article you are going to find out whether hedge funds think Axcelis Technologies Inc (NASDAQ:ACLS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is ACLS a good stock to buy now? Axcelis Technologies Inc (NASDAQ:ACLS) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds' portfolios at the end of September. Our calculations also showed that ACLS 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). At the end of this article we will also compare ACLS to other stocks including China Yuchai International Limited (NYSE:CYD), Benchmark Electronics, Inc. (NYSE:BHE), and Agenus Inc (NASDAQ:AGEN) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most stock holders, hedge funds are viewed as unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds trading today, Our researchers hone in on the elite of this group, around 850 funds. These investment experts oversee bulk of the hedge fund industry's total capital, and by keeping track of their finest stock picks, Insider Monkey has deciphered a number of investment strategies that have historically outpaced Mr. Market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

John Overdeck of Two Sigma
John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

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 we're going to review the key hedge fund action regarding Axcelis Technologies Inc (NASDAQ:ACLS).

Do Hedge Funds Think ACLS Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in ACLS over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Richard Mashaal's Rima Senvest Management has the largest position in Axcelis Technologies Inc (NASDAQ:ACLS), worth close to $35.8 million, corresponding to 2% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which holds a $21.4 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Renaissance Technologies and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to Axcelis Technologies Inc (NASDAQ:ACLS), around 2.03% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.39 percent of its 13F equity portfolio to ACLS.

Due to the fact that Axcelis Technologies Inc (NASDAQ:ACLS) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds who were dropping their entire stakes in the third quarter. At the top of the heap, Chet Kapoor's Tenzing Global Investors cut the biggest stake of all the hedgies monitored by Insider Monkey, comprising close to $7 million in stock, and Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital was right behind this move, as the fund cut about $6.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Axcelis Technologies Inc (NASDAQ:ACLS) but similarly valued. These stocks are China Yuchai International Limited (NYSE:CYD), Benchmark Electronics, Inc. (NYSE:BHE), Agenus Inc (NASDAQ:AGEN), Standex International Corp. (NYSE:SXI), TriCo Bancshares (NASDAQ:TCBK), Tucows Inc. (NASDAQ:TCX), and Meridian Bioscience, Inc. (NASDAQ:VIVO). This group of stocks' market valuations resemble ACLS's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYD,10,80331,3 BHE,10,21753,-4 AGEN,13,57826,-2 SXI,11,34962,-1 TCBK,10,22565,-1 TCX,8,73556,-1 VIVO,19,103498,-4 Average,11.6,56356,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $89 million in ACLS's case. Meridian Bioscience, Inc. (NASDAQ:VIVO) is the most popular stock in this table. On the other hand Tucows Inc. (NASDAQ:TCX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Axcelis Technologies Inc (NASDAQ:ACLS) is more popular among hedge funds. Our overall hedge fund sentiment score for ACLS is 82.3. 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. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on ACLS as the stock returned 29.5% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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