With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Axcella Health Inc. (NASDAQ:AXLA).
Is Axcella Health Inc. (NASDAQ:AXLA) a safe investment right now? Investors who are in the know were cutting their exposure. The number of bullish hedge fund positions retreated by 2 in recent months. Axcella Health Inc. (NASDAQ:AXLA) was in 3 hedge funds' portfolios at the end of September. The all time high for this statistics is 5. Our calculations also showed that AXLA 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). There were 5 hedge funds in our database with AXLA holdings at the end of June. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of indicators investors put to use to value publicly traded companies. Some of the less known indicators are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top investment managers can beat the S&P 500 by a solid margin (see the details here).
Paul Marshall of Marshall Wace
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 let's view the fresh hedge fund action regarding Axcella Health Inc. (NASDAQ:AXLA).
How have hedgies been trading Axcella Health Inc. (NASDAQ:AXLA)?
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AXLA over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Axcella Health Inc. (NASDAQ:AXLA) was held by Marshall Wace LLP, which reported holding $0.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.3 million position. The only other hedge fund that is bullish on the company was Millennium Management.
Seeing as Axcella Health Inc. (NASDAQ:AXLA) has witnessed a decline in interest from hedge fund managers, it's safe to say that there were a few funds that decided to sell off their full holdings by the end of the third quarter. Interestingly, Paul Tudor Jones's Tudor Investment Corp cut the largest position of the 750 funds tracked by Insider Monkey, totaling an estimated $0.1 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also dropped its stock, about $0.1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to Axcella Health Inc. (NASDAQ:AXLA). These stocks are Howard Bancorp Inc (NASDAQ:HBMD), Iteris Inc (NASDAQ:ITI), Centennial Resource Development, Inc. (NASDAQ:CDEV), KVH Industries, Inc. (NASDAQ:KVHI), Tiptree Inc. (NASDAQ:TIPT), Oil States International, Inc. (NYSE:OIS), and Sol-Gel Technologies Ltd. (NASDAQ:SLGL). All of these stocks' market caps resemble AXLA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HBMD,4,11065,-1 ITI,11,19098,-2 CDEV,14,20635,-6 KVHI,4,4825,0 TIPT,3,842,1 OIS,12,10351,-1 SLGL,2,6172,-1 Average,7.1,10427,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $1 million in AXLA's case. Centennial Resource Development, Inc. (NASDAQ:CDEV) is the most popular stock in this table. On the other hand Sol-Gel Technologies Ltd. (NASDAQ:SLGL) is the least popular one with only 2 bullish hedge fund positions. Axcella Health Inc. (NASDAQ:AXLA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AXLA is 25.2. 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. 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 still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on AXLA as the stock returned 16.7% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.