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Hedge Funds Are Buying American Axle & Manufacturing Holdings, Inc. (AXL)

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) was in 25 hedge funds' portfolios at the end of June. The all time high for this statistic is 27. AXL investors should be aware of an increase in hedge fund interest recently. There were 21 hedge funds in our database with AXL holdings at the end of March. Our calculations also showed that AXL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw
David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to analyze the recent hedge fund action encompassing American Axle & Manufacturing Holdings, Inc. (NYSE:AXL).

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

At second quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in AXL over the last 24 quarters. 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, Arrowstreet Capital held the most valuable stake in American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), which was worth $17 million at the end of the second quarter. On the second spot was D E Shaw which amassed $13.1 million worth of shares. Lonestar Capital Management, Millennium Management, and Renaissance Technologies 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 Lonestar Capital Management allocated the biggest weight to American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), around 1.56% of its 13F portfolio. Ellington is also relatively very bullish on the stock, earmarking 0.17 percent of its 13F equity portfolio to AXL.

As industrywide interest jumped, key money managers were leading the bulls' herd. Park West Asset Management, managed by Peter S. Park, initiated the most valuable position in American Axle & Manufacturing Holdings, Inc. (NYSE:AXL). Park West Asset Management had $1.4 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller's PDT Partners, Jinghua Yan's TwinBeech Capital, and Qing Li's Sciencast Management.

Let's also examine hedge fund activity in other stocks similar to American Axle & Manufacturing Holdings, Inc. (NYSE:AXL). We will take a look at Tupperware Brands Corporation (NYSE:TUP), Nurix Therapeutics, Inc. (NASDAQ:NRIX), Adecoagro SA (NYSE:AGRO), 1st Source Corporation (NASDAQ:SRCE), Vine Energy Inc. (NYSE:VEI), Safety Insurance Group, Inc. (NASDAQ:SAFT), and ePlus Inc. (NASDAQ:PLUS). All of these stocks' market caps are similar to AXL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TUP,18,93247,2 NRIX,17,270934,0 AGRO,14,338411,0 SRCE,9,16649,1 VEI,13,114526,-3 SAFT,16,49885,1 PLUS,15,44651,4 Average,14.6,132615,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $75 million in AXL's case. Tupperware Brands Corporation (NYSE:TUP) is the most popular stock in this table. On the other hand 1st Source Corporation (NASDAQ:SRCE) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) is more popular among hedge funds. Our overall hedge fund sentiment score for AXL is 86.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately AXL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AXL were disappointed as the stock returned -0.9% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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