Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 9 percentage points since the end of the third quarter of 2018 as investors worried over the possible ramifications of rising interest rates and escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) and see how the stock is affected by the recent hedge fund activity.
Hedge fund interest in Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AXNX to other stocks including QuinStreet Inc (NASDAQ:QNST), Urstadt Biddle Properties Inc. (NYSE:UBP), and Penn Virginia Corporation (NASDAQ:PVAC) to get a better sense of its popularity.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the latest hedge fund action encompassing Axonics Modulation Technologies, Inc. (NASDAQ:AXNX).
Hedge fund activity in Axonics Modulation Technologies, Inc. (NASDAQ:AXNX)
At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in AXNX a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Cormorant Asset Management held the most valuable stake in Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), which was worth $30.5 million at the end of the first quarter. On the second spot was Perceptive Advisors which amassed $16.4 million worth of shares. Moreover, Redmile Group, Millennium Management, and Rock Springs Capital Management were also bullish on Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), allocating a large percentage of their portfolios to this stock.
Due to the fact that Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) has witnessed a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of fund managers who sold off their positions entirely by the end of the third quarter. Interestingly, Steve Cohen’s Point72 Asset Management sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $4.3 million in stock. David Lohman’s fund, Diag Capital, also sold off its stock, about $0.7 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over 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 QuinStreet Inc (NASDAQ:QNST), Urstadt Biddle Properties Inc. (NYSE:UBP), Penn Virginia Corporation (NASDAQ:PVAC), and CorePoint Lodging Inc. (NYSE:CPLG). This group of stocks’ market valuations match AXNX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QNST | 25 | 200135 | -2 |
| UBP | 2 | 12578 | 0 |
| PVAC | 17 | 167038 | 1 |
| CPLG | 13 | 39801 | -3 |
| Average | 14.25 | 104888 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $85 million in AXNX’s case. QuinStreet Inc (NASDAQ:QNST) is the most popular stock in this table. On the other hand Urstadt Biddle Properties Inc. (NYSE:UBP) is the least popular one with only 2 bullish hedge fund positions. Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on AXNX as the stock returned 50.4% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
