Were Hedge Funds Right About Dumping Axonics, Inc. (AXNX)?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Axonics, Inc. (NASDAQ:AXNX) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Axonics, Inc. (NASDAQ:AXNX) was in 16 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. AXNX has experienced a decrease in enthusiasm from smart money lately. There were 26 hedge funds in our database with AXNX positions at the end of the fourth quarter. Our calculations also showed that AXNX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Robert Pohly of Samlyn Capital
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Do Hedge Funds Think AXNX Is A Good Stock To Buy Now?
At first quarter's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the fourth quarter of 2020. By comparison, 22 hedge funds held shares or bullish call options in AXNX a year ago. So, let's review 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, Ken Griffin's Citadel Investment Group has the largest position in Axonics, Inc. (NASDAQ:AXNX), worth close to $46 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Brian Ashford-Russell and Tim Woolley of Polar Capital, with a $43.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions comprise Bihua Chen's Cormorant Asset Management, Robert Pohly's Samlyn Capital and Steven Boyd's Armistice Capital. In terms of the portfolio weights assigned to each position Blackcrane Capital allocated the biggest weight to Axonics, Inc. (NASDAQ:AXNX), around 6.32% of its 13F portfolio. Rhenman & Partners Asset Management is also relatively very bullish on the stock, designating 1.71 percent of its 13F equity portfolio to AXNX.
Seeing as Axonics, Inc. (NASDAQ:AXNX) has experienced declining sentiment from hedge fund managers, it's safe to say that there is a sect of hedge funds who were dropping their positions entirely heading into Q2. At the top of the heap, James E. Flynn's Deerfield Management said goodbye to the biggest investment of all the hedgies tracked by Insider Monkey, totaling close to $39.9 million in stock, and Principal Global Investors's Columbus Circle Investors was right behind this move, as the fund sold off about $15.2 million worth. These transactions are important to note, as total hedge fund interest dropped by 10 funds heading into Q2.
Let's now review hedge fund activity in other stocks similar to Axonics, Inc. (NASDAQ:AXNX). These stocks are Bloomin' Brands Inc (NASDAQ:BLMN), Telecom Argentina S.A. (NYSE:TEO), Flagstar Bancorp Inc (NYSE:FBC), CryoPort, Inc. (NASDAQ:CYRX), Cubic Corporation (NYSE:CUB), WSFS Financial Corporation (NASDAQ:WSFS), and Mueller Industries, Inc. (NYSE:MLI). This group of stocks' market values match AXNX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLMN,32,498246,8 TEO,9,23425,3 FBC,28,276650,0 CYRX,20,129372,-1 CUB,31,454987,18 WSFS,10,87691,-3 MLI,20,249631,1 Average,21.4,245715,3.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $290 million in AXNX's case. Bloomin' Brands Inc (NASDAQ:BLMN) is the most popular stock in this table. On the other hand Telecom Argentina S.A. (NYSE:TEO) is the least popular one with only 9 bullish hedge fund positions. Axonics, Inc. (NASDAQ:AXNX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AXNX is 27.4. 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 negative signal and 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately AXNX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AXNX investors were disappointed as the stock returned 10.6% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
