We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) and determine whether hedge funds skillfully traded this stock.
Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) has experienced an increase in enthusiasm from smart money lately. Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) was in 26 hedge funds’ portfolios at the end of June. The all time high for this statistics is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AXNX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Richard Driehaus of Driehaus Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 to get excerpts of these letters in your inbox. Now let’s take a gander at the fresh hedge fund action encompassing Axonics Modulation Technologies, Inc. (NASDAQ:AXNX).
How have hedgies been trading Axonics Modulation Technologies, Inc. (NASDAQ:AXNX)?
At the end of June, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AXNX over the last 20 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, James E. Flynn’s Deerfield Management has the number one position in Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), worth close to $49.5 million, comprising 1.4% of its total 13F portfolio. Coming in second is Jeremy Green of Redmile Group, with a $41.9 million position; 0.8% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish comprise Brian Ashford-Russell and Tim Woolley’s Polar Capital, Robert Pohly’s Samlyn Capital and Bihua Chen’s Cormorant Asset Management. In terms of the portfolio weights assigned to each position Blackcrane Capital allocated the biggest weight to Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), around 17.01% of its 13F portfolio. Iron Triangle Partners is also relatively very bullish on the stock, earmarking 3.07 percent of its 13F equity portfolio to AXNX.
As aggregate interest increased, key hedge funds were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, initiated the most valuable position in Axonics Modulation Technologies, Inc. (NASDAQ:AXNX). Driehaus Capital had $8.7 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $5.6 million position during the quarter. The following funds were also among the new AXNX investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Noam Gottesman’s GLG Partners, and Chuck Royce’s Royce & Associates.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) but similarly valued. We will take a look at Regenxbio Inc (NASDAQ:RGNX), MacroGenics Inc (NASDAQ:MGNX), Sonic Automotive Inc (NYSE:SAH), CSG Systems International, Inc. (NASDAQ:CSGS), TowneBank (NASDAQ:TOWN), Essential Properties Realty Trust, Inc. (NYSE:EPRT), and Navient Corp (NASDAQ:NAVI). This group of stocks’ market valuations are similar to AXNX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RGNX | 23 | 200326 | 4 |
| MGNX | 21 | 504720 | 5 |
| SAH | 12 | 66907 | -2 |
| CSGS | 22 | 167776 | 3 |
| TOWN | 9 | 27236 | 5 |
| EPRT | 13 | 61662 | 5 |
| NAVI | 27 | 209751 | -6 |
| Average | 18.1 | 176911 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $339 million in AXNX’s case. Navient Corp (NASDAQ:NAVI) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 9 bullish hedge fund positions. Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AXNX is 86.2. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Hedge funds were also right about betting on AXNX as the stock returned 29% during Q3 (through September 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
