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 third 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 years and analyze what the smart money thinks of Axcella Health Inc. (NASDAQ:AXLA) based on that data.
Is Axcella Health Inc. (NASDAQ:AXLA) the right pick for your portfolio? Money managers are selling. The number of bullish hedge fund bets dropped by 1 recently. Our calculations also showed that AXLA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). AXLA was in 3 hedge funds' portfolios at the end of September. There were 4 hedge funds in our database with AXLA positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are assumed to be underperforming, outdated investment vehicles of the past. While there are over 8000 funds trading at present, We choose to focus on the moguls of this club, approximately 750 funds. Most estimates calculate that this group of people direct most of all hedge funds' total asset base, and by watching their finest equity investments, Insider Monkey has deciphered several investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a 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_30668" align="aligncenter" width="478"] Richard Chilton of Chilton Investment Company[/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. Now we're going to take a glance at the new hedge fund action regarding Axcella Health Inc. (NASDAQ:AXLA).
What have hedge funds been doing with Axcella Health Inc. (NASDAQ:AXLA)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in AXLA over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Alyeska Investment Group held the most valuable stake in Axcella Health Inc. (NASDAQ:AXLA), which was worth $0.4 million at the end of the third quarter. On the second spot was Millennium Management which amassed $0.4 million worth of shares. Chilton Investment Company was 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 Chilton Investment Company allocated the biggest weight to Axcella Health Inc. (NASDAQ:AXLA), around 0.01% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to AXLA.
Seeing as Axcella Health Inc. (NASDAQ:AXLA) has experienced declining sentiment from hedge fund managers, it's easy to see that there was a specific group of hedgies that slashed their full holdings by the end of the third quarter. At the top of the heap, Arthur B Cohen and Joseph Healey's Healthcor Management dumped the largest stake of the "upper crust" of funds watched by Insider Monkey, valued at close to $1.6 million in stock, and Kevin Cottrell and Chris LaSusa's KCL Capital was right behind this move, as the fund cut about $0.1 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Axcella Health Inc. (NASDAQ:AXLA) but similarly valued. These stocks are Adams Resources & Energy Inc (NYSE:AE), Goodrich Petroleum Corporation (NYSE:GDP), Manitex International, Inc. (NASDAQ:MNTX), and Oconee Federal Financial Corp. (NASDAQ:OFED). All of these stocks' market caps are similar to AXLA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AE,5,12371,0 GDP,6,24314,1 MNTX,8,10576,0 OFED,2,696,0 Average,5.25,11989,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $1 million in AXLA's case. Manitex International, Inc. (NASDAQ:MNTX) is the most popular stock in this table. On the other hand Oconee Federal Financial Corp.(NASDAQ:OFED) is the least popular one with only 2 bullish hedge fund positions. Axcella Health Inc. (NASDAQ:AXLA) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AXLA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AXLA investors were disappointed as the stock returned -29.3% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.