In this article you are going to find out whether hedge funds think AzurRx BioPharma, Inc. (NASDAQ:AZRX) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is AzurRx BioPharma, Inc. (NASDAQ:AZRX) undervalued? Prominent investors are turning bullish. The number of bullish hedge fund bets advanced by 2 lately. Our calculations also showed that AZRX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). AZRX was in 3 hedge funds' portfolios at the end of the first quarter of 2020. There were 1 hedge funds in our database with AZRX holdings at the end of the previous quarter. Video: 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 S&P 500 ETFs by 44 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.
[caption id="attachment_687238" align="aligncenter" width="400"] Philip Hempleman of Ardsley Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a peek at the key hedge fund action surrounding AzurRx BioPharma, Inc. (NASDAQ:AZRX).
What have hedge funds been doing with AzurRx BioPharma, Inc. (NASDAQ:AZRX)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AZRX over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Ardsley Partners held the most valuable stake in AzurRx BioPharma, Inc. (NASDAQ:AZRX), which was worth $0 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $0 million worth of shares. 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 Ardsley Partners allocated the biggest weight to AzurRx BioPharma, Inc. (NASDAQ:AZRX), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0 percent of its 13F equity portfolio to AZRX.
Consequently, key hedge funds have jumped into AzurRx BioPharma, Inc. (NASDAQ:AZRX) headfirst. Renaissance Technologies, created the most outsized position in AzurRx BioPharma, Inc. (NASDAQ:AZRX). Renaissance Technologies had $0 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as AzurRx BioPharma, Inc. (NASDAQ:AZRX) but similarly valued. These stocks are ThermoGenesis Holdings, Inc. (NASDAQ:THMO), Liquid Media Group Ltd. (NASDAQ:YVR), Bioline RX Ltd (NASDAQ:BLRX), and The Alkaline Water Company Inc. (NASDAQ:WTER). This group of stocks' market values match AZRX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position THMO,1,501,0 YVR,2,148,1 BLRX,4,3116,0 WTER,1,184,-1 Average,2,987,0 [/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 AZRX's case. Bioline RX Ltd (NASDAQ:BLRX) is the most popular stock in this table. On the other hand ThermoGenesis Holdings, Inc. (NASDAQ:THMO) is the least popular one with only 1 bullish hedge fund positions. AzurRx BioPharma, Inc. (NASDAQ:AZRX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on AZRX as the stock returned 55.2% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.