You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is Axos Financial, Inc. (NYSE:AX) a superb investment today? Hedge funds are betting on the stock. The number of long hedge fund positions improved by 4 recently. Our calculations also showed that AX isn’t among the 30 most popular stocks among hedge funds.
At the moment there are plenty of signals stock market investors put to use to size up their stock investments. A couple of the less known signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outclass the market by a healthy amount (see the details here).
Let’s take a look at the latest hedge fund action regarding Axos Financial, Inc. (NYSE:AX).
What have hedge funds been doing with Axos Financial, Inc. (NYSE:AX)?
At Q4’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from the second quarter of 2018. By comparison, 10 hedge funds held shares or bullish call options in AX a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Vertex One Asset Management was the largest shareholder of Axos Financial, Inc. (NYSE:AX), with a stake worth $14.4 million reported as of the end of December. Trailing Vertex One Asset Management was Royce & Associates, which amassed a stake valued at $12.3 million. Basswood Capital, PEAK6 Capital Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, created the largest position in Axos Financial, Inc. (NYSE:AX). Renaissance Technologies had $4.7 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $3.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Axos Financial, Inc. (NYSE:AX) but similarly valued. These stocks are Acushnet Holdings Corp. (NYSE:GOLF), Workiva Inc (NYSE:WK), Moelis & Company (NYSE:MC), and FCB Financial Holdings Inc (NYSE:FCB). This group of stocks’ market values are similar to AX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOLF | 11 | 21058 | -3 |
| WK | 16 | 147554 | 1 |
| MC | 21 | 72307 | 1 |
| FCB | 18 | 269486 | -5 |
| Average | 16.5 | 127601 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $65 million in AX’s case. Moelis & Company (NYSE:MC) is the most popular stock in this table. On the other hand Acushnet Holdings Corp. (NYSE:GOLF) is the least popular one with only 11 bullish hedge fund positions. Axos Financial, Inc. (NYSE:AX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on AX, though not to the same extent, as the stock returned 23.1% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.