Hedge Funds Are Betting On AxoGen, Inc. (AXGN)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards AxoGen, Inc. (NASDAQ:AXGN).

AxoGen, Inc. (NASDAQ:AXGN) investors should be aware of an increase in support from the world’s most successful money managers in recent months. There were 7 hedge funds in our database with AXGN 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 Parker Drilling Company (NYSE:PKD), PICO Holdings Inc (NASDAQ:PICO), and RigNet Inc (NASDAQ:RNET) to gather more data points.

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.

Dmitry Kalinovsky/Shuteerstock.com

Now, let’s take a glance at the fresh action encompassing AxoGen, Inc. (NASDAQ:AXGN).

What does the smart money think about AxoGen, Inc. (NASDAQ:AXGN)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 57% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AXGN over the last 5 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, James A. Silverman’s Opaleye Management has the largest position in AxoGen, Inc. (NASDAQ:AXGN), worth close to $18.1 million, corresponding to 9.5% of its total 13F portfolio. Sitting at the No. 2 spot is Deerfield Management, led by James E. Flynn, holding a $17.1 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish comprise Josh Goldberg’s G2 Investment Partners Management, Renaissance Technologies, one of the largest hedge funds in the world, and Warren Lammert’s Granite Point Capital. 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.

Consequently, key money managers were leading the bulls’ herd. Warren Lammert’s Granite Point Capital, initiated the most outsized position in AxoGen, Inc. (NASDAQ:AXGN). According to regulatory filings, the fund had $0.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.5 million position during the quarter. The other funds with brand new AXGN positions are John Overdeck and David Siegel’s Two Sigma Advisors, Frank Slattery’s Symmetry Peak Management, and Chuck Royce’s Royce & Associates.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AxoGen, Inc. (NASDAQ:AXGN) but similarly valued. These stocks are Parker Drilling Company (NYSE:PKD), PICO Holdings Inc (NASDAQ:PICO), RigNet Inc (NASDAQ:RNET), and JP Energy Partners LP (NYSE:JPEP). This group of stocks’ market caps match AXGN’s market cap.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $40 million in AXGN’s case. Parker Drilling Company (NYSE:PKD) is the most popular stock in this table. On the other hand JP Energy Partners LP (NYSE:JPEP) is the least popular one with only 3 bullish hedge fund positions. AxoGen, Inc. (NASDAQ:AXGN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PKD might be a better candidate to consider taking a long position in.

Disclosure: none.