In this article we will take a look at whether hedge funds think Abraxas Petroleum Corp. (NASDAQ:AXAS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Abraxas Petroleum Corp. (NASDAQ:AXAS) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 15. AXAS shareholders have witnessed a decrease in support from the world's most elite money managers recently. There were 4 hedge funds in our database with AXAS positions at the end of the fourth quarter. Our calculations also showed that AXAS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 take a look at the key hedge fund action surrounding Abraxas Petroleum Corp. (NASDAQ:AXAS).
Do Hedge Funds Think AXAS Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AXAS over the last 23 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Abraxas Petroleum Corp. (NASDAQ:AXAS), with a stake worth $0.3 million reported as of the end of March. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $0.1 million. Citadel Investment Group 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 Renaissance Technologies allocated the biggest weight to Abraxas Petroleum Corp. (NASDAQ:AXAS), around 0.0003% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, designating 0.0001 percent of its 13F equity portfolio to AXAS.
Due to the fact that Abraxas Petroleum Corp. (NASDAQ:AXAS) has faced a decline in interest from the smart money, it's safe to say that there were a few hedge funds that decided to sell off their entire stakes by the end of the first quarter. It's worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the biggest position of the 750 funds followed by Insider Monkey, totaling an estimated $0 million in stock, and David Harding's Winton Capital Management was right behind this move, as the fund dropped about $0 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Abraxas Petroleum Corp. (NASDAQ:AXAS) but similarly valued. These stocks are Muscle Maker, Inc. (NASDAQ:GRIL), Camber Energy, Inc. (NYSE:CEI), Equus Total Return, Inc. (NYSE:EQS), Artelo Biosciences, Inc. (NASDAQ:ARTL), Rave Restaurant Group, Inc. (NASDAQ:RAVE), Rubicon Technology, Inc. (NASDAQ:RBCN), and Ashford Inc. (NYSE:AINC). This group of stocks' market caps are closest to AXAS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GRIL,2,374,1 CEI,1,176,-1 EQS,2,200,1 ARTL,1,295,1 RAVE,3,882,1 RBCN,3,4340,0 AINC,2,1024,0 Average,2,1042,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $0 million in AXAS's case. Rave Restaurant Group, Inc. (NASDAQ:RAVE) is the most popular stock in this table. On the other hand Camber Energy, Inc. (NYSE:CEI) is the least popular one with only 1 bullish hedge fund positions. Abraxas Petroleum Corp. (NASDAQ:AXAS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AXAS is 60. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately AXAS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AXAS were disappointed as the stock returned 2.2% since the end of March (through 6/11) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.