Axis Capital Holdings Limited (AXS) Fell Out Of Favor With Hedge Funds

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Axis Capital Holdings Limited (NYSE:AXS).

Is Axis Capital Holdings Limited (NYSE:AXS) a buy right now? The best stock pickers were taking a bearish view. The number of bullish hedge fund bets dropped by 4 recently. Axis Capital Holdings Limited (NYSE:AXS) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that AXS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are dozens of tools stock traders employ to evaluate publicly traded companies. Some of the less known tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top money managers can outpace the market by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Chuck Royce of Royce & Associates

Keeping this in mind we’re going to take a look at the key hedge fund action encompassing Axis Capital Holdings Limited (NYSE:AXS).

Do Hedge Funds Think AXS Is A Good Stock To Buy Now?

At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the first quarter of 2020. On the other hand, there were a total of 35 hedge funds with a bullish position in AXS a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Among these funds, Pzena Investment Management held the most valuable stake in Axis Capital Holdings Limited (NYSE:AXS), which was worth $341 million at the end of the second quarter. On the second spot was Paradice Investment Management which amassed $81.9 million worth of shares. Citadel Investment Group, Royce & Associates, and Renaissance Technologies were 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 Paradice Investment Management allocated the biggest weight to Axis Capital Holdings Limited (NYSE:AXS), around 3.8% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, earmarking 2.84 percent of its 13F equity portfolio to AXS.

Due to the fact that Axis Capital Holdings Limited (NYSE:AXS) has witnessed declining sentiment from the smart money, it’s easy to see that there was a specific group of hedge funds that decided to sell off their full holdings by the end of the second quarter. Intriguingly, John A. Levin’s Levin Capital Strategies said goodbye to the biggest stake of the 750 funds followed by Insider Monkey, valued at an estimated $11 million in stock, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management was right behind this move, as the fund sold off about $0.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 4 funds by the end of the second quarter.

Let’s now review hedge fund activity in other stocks similar to Axis Capital Holdings Limited (NYSE:AXS). These stocks are JBG SMITH Properties (NYSE:JBGS), Tegna Inc (NYSE:TGNA), Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), Univar Solutions Inc (NYSE:UNVR), Portland General Electric Company (NYSE:POR), Envestnet Inc (NYSE:ENV), and Black Hills Corporation (NYSE:BKH). This group of stocks’ market caps are closest to AXS’s market cap.

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As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $609 million in AXS’s case. Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) is the most popular stock in this table. On the other hand Black Hills Corporation (NYSE:BKH) is the least popular one with only 14 bullish hedge fund positions. Axis Capital Holdings Limited (NYSE:AXS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AXS is 29.8. 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 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on AXS as the stock returned 7.1% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.