It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like AveXis Inc (NASDAQ:AVXS) .
AveXis Inc (NASDAQ:AVXS) investors should be aware of an increase in support from the world’s most successful money managers of late. AVXS was in 20 hedge funds’ portfolios at the end of the third quarter of 2016. There were 10 hedge funds in our database with AVXS holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Trina Solar Limited (ADR) (NYSE:TSL), New Senior Investment Group Inc (NYSE:SNR), and Patrick Industries, Inc. (NASDAQ:PATK) to gather more data points.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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What does the smart money think about AveXis Inc (NASDAQ:AVXS)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards AVXS over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, James E. Flynn’s Deerfield Management has the largest position in AveXis Inc (NASDAQ:AVXS), worth close to $92.2 million, comprising 4.3% of its total 13F portfolio. On Deerfield Management’s heels is RA Capital Management, led by Peter Kolchinsky, which holds a $71.4 million position; the fund has 7.4% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Phill Gross and Robert Atchinson’s Adage Capital Management, Paul Marshall, and Jeffrey Jay and David Kroin’s Great Point Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, specific money managers have been driving this bullishness. Marshall Wace LLP established the biggest position in AveXis Inc (NASDAQ:AVXS). Marshall Wace LLP had $17.7 million invested in the company at the end of the quarter. Great Point Partners also initiated a $15.7 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as AveXis Inc (NASDAQ:AVXS) but similarly valued. These stocks are Trina Solar Limited (ADR) (NYSE:TSL), New Senior Investment Group Inc (NYSE:SNR), Patrick Industries, Inc. (NASDAQ:PATK), and Fortress Transprtn and Infr Investrs LLC (NYSE:FTAI). This group of stocks’ market valuations resemble AVXS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSL | 18 | 206998 | 3 |
| SNR | 17 | 114119 | 2 |
| PATK | 17 | 110883 | -2 |
| FTAI | 5 | 6685 | 2 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $298 million in AVXS’s case. Trina Solar Limited (ADR) (NYSE:TSL) is the most popular stock in this table. On the other hand Fortress Transprtn and Infr Investrs LLC (NYSE:FTAI) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks AveXis Inc (NASDAQ:AVXS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
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