Is Axcelis Technologies Inc (NASDAQ:ACLS) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Axcelis Technologies Inc (NASDAQ:ACLS) investors should pay attention to a decrease in hedge fund sentiment in recent months. ACLS was in 14 hedge funds' portfolios at the end of the second quarter of 2019. There were 16 hedge funds in our database with ACLS positions at the end of the previous quarter. Our calculations also showed that ACLS isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the key hedge fund action encompassing Axcelis Technologies Inc (NASDAQ:ACLS).
What does smart money think about Axcelis Technologies Inc (NASDAQ:ACLS)?
At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in ACLS over the last 16 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.
Of the funds tracked by Insider Monkey, Rima Senvest Management, managed by Richard Mashaal, holds the biggest position in Axcelis Technologies Inc (NASDAQ:ACLS). Rima Senvest Management has a $34.6 million position in the stock, comprising 3% of its 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $9.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Chet Kapoor's Tenzing Global Investors, John Overdeck and David Siegel's Two Sigma Advisors and D. E. Shaw's D E Shaw.
Because Axcelis Technologies Inc (NASDAQ:ACLS) has witnessed declining sentiment from hedge fund managers, we can see that there were a few funds who were dropping their full holdings in the second quarter. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management dumped the biggest stake of the "upper crust" of funds followed by Insider Monkey, comprising close to $2.9 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dropped about $1.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the second quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Axcelis Technologies Inc (NASDAQ:ACLS) but similarly valued. These stocks are Primo Water Corporation (NASDAQ:PRMW), Barings BDC, Inc. (NYSE:BBDC), PolyMet Mining Corp. (NYSE:PLM), and American Outdoor Brands Corporation (NASDAQ:AOBC). All of these stocks' market caps are closest to ACLS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRMW,12,108629,-1 BBDC,13,31645,1 PLM,3,211,1 AOBC,16,85438,1 Average,11,56481,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $60 million in ACLS's case. American Outdoor Brands Corporation (NASDAQ:AOBC) is the most popular stock in this table. On the other hand PolyMet Mining Corp. (NYSE:PLM) is the least popular one with only 3 bullish hedge fund positions. Axcelis Technologies Inc (NASDAQ:ACLS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on ACLS as the stock returned 13.6% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.