Is AxoGen, Inc. (NASDAQ:AXGN) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
AxoGen, Inc. (NASDAQ:AXGN) was in 19 hedge funds' portfolios at the end of March. AXGN has experienced an increase in support from the world's most elite money managers lately. There were 18 hedge funds in our database with AXGN positions at the end of the previous quarter. Our calculations also showed that axgn isn't among the 30 most popular stocks among hedge funds.
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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's take a look at the new hedge fund action surrounding AxoGen, Inc. (NASDAQ:AXGN).
What does the smart money think about AxoGen, Inc. (NASDAQ:AXGN)?
At Q1's end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AXGN over the last 15 quarters. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, James E. Flynn's Deerfield Management has the number one position in AxoGen, Inc. (NASDAQ:AXGN), worth close to $37.2 million, amounting to 1.4% of its total 13F portfolio. The second most bullish fund manager is Opaleye Management, managed by James A. Silverman, which holds a $23.2 million position; 6.4% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions contain Kris Jenner, Gordon Bussard, Graham McPhail's Rock Springs Capital Management, Noam Gottesman's GLG Partners and Phill Gross and Robert Atchinson's Adage Capital Management.
With a general bullishness amongst the heavyweights, specific money managers have jumped into AxoGen, Inc. (NASDAQ:AXGN) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the largest position in AxoGen, Inc. (NASDAQ:AXGN). Adage Capital Management had $7.4 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $7.1 million investment in the stock during the quarter. The other funds with brand new AXGN positions are Efrem Kamen's Pura Vida Investments, Dmitry Balyasny's Balyasny Asset Management, and Constantinos J. Christofilis's Archon Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as AxoGen, Inc. (NASDAQ:AXGN) but similarly valued. We will take a look at Renewable Energy Group Inc (NASDAQ:REGI), nLIGHT, Inc. (NASDAQ:LASR), Cooper-Standard Holdings Inc (NYSE:CPS), and John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS). This group of stocks' market caps resemble AXGN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position REGI,19,84797,1 LASR,5,57624,1 CPS,15,41038,-2 JBSS,11,106528,1 Average,12.5,72497,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $130 million in AXGN's case. Renewable Energy Group Inc (NASDAQ:REGI) is the most popular stock in this table. On the other hand nLIGHT, Inc. (NASDAQ:LASR) is the least popular one with only 5 bullish hedge fund positions. AxoGen, Inc. (NASDAQ:AXGN) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on AXGN, though not to the same extent, as the stock returned 0.9% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.