Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 15 S&P 500 stocks among hedge funds at the end of December 2018 yielded an average return of 19.7% year-to-date, vs. a gain of 13.1% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Codexis, Inc. (NASDAQ:CDXS).
Is Codexis, Inc. (NASDAQ:CDXS) a bargain? Prominent investors are getting more bullish. The number of bullish hedge fund bets moved up by 1 recently. Our calculations also showed that CDXS isn’t among the 30 most popular stocks among hedge funds. CDXS was in 13 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 12 hedge funds in our database with CDXS positions at the end of the previous quarter.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s go over the new hedge fund action surrounding Codexis, Inc. (NASDAQ:CDXS).
Hedge fund activity in Codexis, Inc. (NASDAQ:CDXS)
Heading into the first quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in CDXS over the last 14 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Codexis, Inc. (NASDAQ:CDXS) was held by Nantahala Capital Management, which reported holding $109.4 million worth of stock at the end of December. It was followed by Vivo Capital with a $45.3 million position. Other investors bullish on the company included Casdin Capital, Opaleye Management, and Prescott Group Capital Management.
As aggregate interest increased, key hedge funds were breaking ground themselves. Vivo Capital, managed by Albert Cha and Frank Kung, established the most valuable position in Codexis, Inc. (NASDAQ:CDXS). Vivo Capital had $45.3 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $0.7 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Codexis, Inc. (NASDAQ:CDXS) but similarly valued. We will take a look at Trueblue Inc (NYSE:TBI), Lattice Semiconductor Corporation (NASDAQ:LSCC), Genesco Inc. (NYSE:GCO), and Boston Private Financial Hldg Inc (NASDAQ:BPFH). This group of stocks’ market caps are closest to CDXS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TBI | 15 | 61257 | 1 |
| LSCC | 22 | 139452 | 4 |
| GCO | 22 | 97395 | 3 |
| BPFH | 13 | 51565 | 4 |
| Average | 18 | 87417 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $276 million in CDXS’s case. Lattice Semiconductor Corporation (NASDAQ:LSCC) is the most popular stock in this table. On the other hand Boston Private Financial Hldg Inc (NASDAQ:BPFH) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Codexis, Inc. (NASDAQ:CDXS) is even less popular than BPFH. 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 CDXS, though not to the same extent, as the stock returned 21.1% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
