Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Anixter International Inc. (NYSE:AXE) based on that data.
Anixter International Inc. (NYSE:AXE) investors should pay attention to a decrease in hedge fund interest recently. AXE was in 21 hedge funds' portfolios at the end of the first quarter of 2020. There were 43 hedge funds in our database with AXE positions at the end of the previous quarter. Our calculations also showed that AXE 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.
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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_738761" align="aligncenter" width="400"] Fred DiSanto of Ancora Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's view the latest hedge fund action encompassing Anixter International Inc. (NYSE:AXE).
What does smart money think about Anixter International Inc. (NYSE:AXE)?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -51% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AXE over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Alpine Associates held the most valuable stake in Anixter International Inc. (NYSE:AXE), which was worth $121.9 million at the end of the third quarter. On the second spot was Water Island Capital which amassed $97.1 million worth of shares. Carlson Capital, Pentwater Capital Management, and Citadel Investment Group 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 Water Island Capital allocated the biggest weight to Anixter International Inc. (NYSE:AXE), around 7.02% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, setting aside 5.26 percent of its 13F equity portfolio to AXE.
Because Anixter International Inc. (NYSE:AXE) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there was a specific group of hedge funds that slashed their full holdings last quarter. At the top of the heap, Farallon Capital cut the biggest stake of the 750 funds monitored by Insider Monkey, totaling about $84.5 million in stock. Shane Finemore's fund, Manikay Partners, also said goodbye to its stock, about $23.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 22 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Anixter International Inc. (NYSE:AXE) but similarly valued. These stocks are Emergent Biosolutions Inc (NYSE:EBS), NIO Inc. (NYSE:NIO), frontdoor, inc. (NASDAQ:FTDR), and Polaris Inc. (NYSE:PII). This group of stocks' market caps resemble AXE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EBS,17,114485,5 NIO,16,29111,0 FTDR,33,552969,-4 PII,24,157435,-2 Average,22.5,213500,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $214 million. That figure was $541 million in AXE's case. frontdoor, inc. (NASDAQ:FTDR) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 16 bullish hedge fund positions. Anixter International Inc. (NYSE:AXE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately AXE wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AXE investors were disappointed as the stock returned 11.2% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.