Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 5.2% during the last 12 months ending October 30, 2015. Less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 S&P 500 stocks among hedge funds at the end of September 2014 had an average return of 9.5% during the same period. Sixty three percent of these 30 stocks outperformed the market. Hedge funds had bad stock picks like everyone else. Micron, which lost 50% over this period, was one of hedge funds’ 30 favorite S&P 500 stocks. Anadarko Petroleum was another failed stock pick which lost more than 26%. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about AxoGen, Inc. (NASDAQ:AXGN).
AxoGen, Inc. (NASDAQ:AXGN)’s shares surged by more than 30% in the third quarter, and experienced a slight increase in hedge fund sentiment although the stock remains overlooked by most investors that we track. AXGN was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article we will also compare AXGN to other stocks including Intevac, Inc. (NASDAQ:IVAC), SCYNEXIS Inc (NASDAQ:SCYX), and Lakeland Industries, Inc. (NASDAQ:LAKE) to get a better sense of its popularity.
Follow Axogen Inc. (NASDAQ:AXGN)
Follow Axogen Inc. (NASDAQ:AXGN)
In the 21st century investor’s toolkit there are plenty of indicators stock traders have at their disposal to size up their holdings. A duo of the most under-the-radar indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the broader indices by a significant amount (see the details here).
With all of this in mind, let’s go over the key action regarding AxoGen, Inc. (NASDAQ:AXGN).
How are hedge funds trading AxoGen, Inc. (NASDAQ:AXGN)?
Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by one over the quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Deerfield Management, managed by James E. Flynn, holds the most valuable position in AxoGen, Inc. (NASDAQ:AXGN). Deerfield Management has a $13.9 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund is Opaleye Management, managed by James A. Silverman, which holds a $8.7 million position; 4.3% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish comprise Mitchell Blutt’s Consonance Capital Management and Jim Simons’ Renaissance Technologies.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Consonance Capital Management established the biggest position in AxoGen, Inc. (NASDAQ:AXGN). Consonance Capital Management had $0.9 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.3 million position during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as AxoGen, Inc. (NASDAQ:AXGN) but similarly valued. These stocks are Intevac, Inc. (NASDAQ:IVAC), SCYNEXIS Inc (NASDAQ:SCYX), Lakeland Industries, Inc. (NASDAQ:LAKE), and Nicholas Financial, Inc. (NASDAQ:NICK). All of these stocks’ market caps are similar to AXGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IVAC | 7 | 40332 | -1 |
| SCYX | 9 | 20647 | 0 |
| LAKE | 6 | 10687 | 4 |
| NICK | 4 | 8327 | -1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $24 million in AXGN’s case. SCYNEXIS Inc (NASDAQ:SCYX) is the most popular stock in this table. On the other hand Nicholas Financial, Inc. (NASDAQ:NICK) is the least popular one with only 4 bullish hedge fund positions, the same as in AxoGen, Inc. (NASDAQ:AXGN)’s case. Considering that hedge funds aren’t very fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.