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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Advaxis, Inc. (NASDAQ:ADXS) in this article.
Advaxis, Inc. (NASDAQ:ADXS) was in 3 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 21. ADXS shareholders have witnessed an increase in hedge fund interest lately. There were 2 hedge funds in our database with ADXS positions at the end of the second quarter. Our calculations also showed that ADXS isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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 66 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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Now we're going to take a look at the new hedge fund action encompassing Advaxis, Inc. (NASDAQ:ADXS).
Hedge fund activity in Advaxis, Inc. (NASDAQ:ADXS)
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the second quarter of 2020. By comparison, 6 hedge funds held shares or bullish call options in ADXS a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the number one position in Advaxis, Inc. (NASDAQ:ADXS). Renaissance Technologies has a $1.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies's heels is Michael Gelband of ExodusPoint Capital, with a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to Advaxis, Inc. (NASDAQ:ADXS), around 0.0015% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0013 percent of its 13F equity portfolio to ADXS.
As aggregate interest increased, key money managers were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, established the most outsized position in Advaxis, Inc. (NASDAQ:ADXS). ExodusPoint Capital had $0.1 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks similar to Advaxis, Inc. (NASDAQ:ADXS). These stocks are IMPAC Mortgage Holdings, Inc (NYSE:IMH), Avinger Inc (NASDAQ:AVGR), Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF), Sotherly Hotels Inc (NASDAQ:SOHO), ToughBuilt Industries, Inc. (NASDAQ:TBLT), Data I/O Corporation (NASDAQ:DAIO), and BIO-key International, Inc. (NASDAQ:BKYI). This group of stocks' market values are closest to ADXS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IMH,5,213,0 AVGR,2,71,0 JCTCF,1,1331,0 SOHO,2,762,-1 TBLT,4,84,1 DAIO,2,4411,0 BKYI,3,662,1 Average,2.7,1076,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in ADXS's case. IMPAC Mortgage Holdings, Inc (NYSE:IMH) is the most popular stock in this table. On the other hand Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF) is the least popular one with only 1 bullish hedge fund positions. Advaxis, Inc. (NASDAQ:ADXS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADXS is 35.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and beat the market again by 15.4 percentage points. Unfortunately ADXS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ADXS were disappointed as the stock returned -4.6% since the end of September (through 11/23) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.