Were Hedge Funds Right About Buying Axcelis Technologies Inc (ACLS)?
At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Axcelis Technologies Inc (NASDAQ:ACLS) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Axcelis Technologies Inc (NASDAQ:ACLS) investors should be aware of an increase in enthusiasm from smart money lately. Our calculations also showed that ACLS 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are seen as slow, outdated investment vehicles of the past. While there are greater than 8000 funds with their doors open today, Our experts choose to focus on the masters of this group, around 850 funds. Most estimates calculate that this group of people control most of all hedge funds' total capital, and by shadowing their highest performing investments, Insider Monkey has brought to light several investment strategies that have historically exceeded the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_746830" align="aligncenter" width="400"]
Matthew Hulsizer of PEAK6 Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 12 largest cement producing countries to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a gander at the new hedge fund action regarding Axcelis Technologies Inc (NASDAQ:ACLS).
How have hedgies been trading Axcelis Technologies Inc (NASDAQ:ACLS)?
Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ACLS over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Axcelis Technologies Inc (NASDAQ:ACLS) was held by Rima Senvest Management, which reported holding $39.9 million worth of stock at the end of September. It was followed by Royce & Associates with a $17.1 million position. Other investors bullish on the company included Tenzing Global Investors, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Tenzing Global Investors allocated the biggest weight to Axcelis Technologies Inc (NASDAQ:ACLS), around 7.08% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, earmarking 4.67 percent of its 13F equity portfolio to ACLS.
Now, key hedge funds were breaking ground themselves. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, created the biggest position in Axcelis Technologies Inc (NASDAQ:ACLS). Algert Coldiron Investors had $0.6 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also initiated a $0.3 million position during the quarter. The only other fund with a brand new ACLS position is Greg Eisner's Engineers Gate Manager.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Axcelis Technologies Inc (NASDAQ:ACLS) but similarly valued. We will take a look at The RealReal, Inc. (NASDAQ:REAL), Radius Health Inc (NASDAQ:RDUS), Revolve Group, Inc. (NYSE:RVLV), and Inseego Corp. (NASDAQ:INSG). This group of stocks' market valuations match ACLS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position REAL,15,79260,2 RDUS,23,111468,1 RVLV,10,11180,-1 INSG,12,18676,4 Average,15,55146,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $81 million in ACLS's case. Radius Health Inc (NASDAQ:RDUS) is the most popular stock in this table. On the other hand Revolve Group, Inc. (NYSE:RVLV) is the least popular one with only 10 bullish hedge fund positions. Axcelis Technologies Inc (NASDAQ:ACLS) is not the least popular stock in this group but hedge fund interest is still below 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on ACLS as the stock returned 51.3% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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