We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Anavex Life Sciences Corp. (NASDAQ:AVXL).
Anavex Life Sciences Corp. (NASDAQ:AVXL) has seen a decrease in hedge fund interest in recent months. Our calculations also showed that AVXL 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.
According to most market participants, hedge funds are perceived as unimportant, outdated investment vehicles of the past. While there are greater than 8000 funds in operation at the moment, Our researchers choose to focus on the bigwigs of this club, around 750 funds. These investment experts shepherd the majority of the hedge fund industry's total asset base, and by tracking their finest investments, Insider Monkey has unearthed various investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year 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_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
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 check out the latest hedge fund action encompassing Anavex Life Sciences Corp. (NASDAQ:AVXL).
How have hedgies been trading Anavex Life Sciences Corp. (NASDAQ:AVXL)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the second quarter of 2019. On the other hand, there were a total of 6 hedge funds with a bullish position in AVXL 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.
When looking at the institutional investors followed by Insider Monkey, Peter S. Park's Park West Asset Management has the number one position in Anavex Life Sciences Corp. (NASDAQ:AVXL), worth close to $10.3 million, comprising 0.5% of its total 13F portfolio. The second largest stake is held by Knoll Capital Management, led by Fred Knoll, holding a $2.3 million position; 2.1% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism include David Harding's Winton Capital Management, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Knoll Capital Management allocated the biggest weight to Anavex Life Sciences Corp. (NASDAQ:AVXL), around 2.09% of its 13F portfolio. Park West Asset Management is also relatively very bullish on the stock, setting aside 0.5 percent of its 13F equity portfolio to AVXL.
Since Anavex Life Sciences Corp. (NASDAQ:AVXL) has experienced bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there lies a certain "tier" of funds that slashed their entire stakes last quarter. At the top of the heap, Israel Englander's Millennium Management said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, valued at close to $0.2 million in stock. David E. Shaw's fund, D E Shaw, also sold off its stock, about $0.1 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Anavex Life Sciences Corp. (NASDAQ:AVXL). We will take a look at Mackinac Financial Corporation (NASDAQ:MFNC), Vapotherm, Inc. (NYSE:VAPO), Calithera Biosciences Inc (NASDAQ:CALA), and Yatra Online, Inc. (NASDAQ:YTRA). This group of stocks' market caps are closest to AVXL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MFNC,5,13964,1 VAPO,8,43104,2 CALA,12,34142,-3 YTRA,7,42270,0 Average,8,33370,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $13 million in AVXL's case. Calithera Biosciences Inc (NASDAQ:CALA) is the most popular stock in this table. On the other hand Mackinac Financial Corporation (NASDAQ:MFNC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Anavex Life Sciences Corp. (NASDAQ:AVXL) is even less popular than MFNC. Hedge funds dodged a bullet by taking a bearish stance towards AVXL. 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 AVXL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AVXL investors were disappointed as the stock returned -24.1% 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.