There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Abaxis Inc (NASDAQ:ABAX).
Abaxis Inc (NASDAQ:ABAX) was in 8 hedge funds’ portfolios at the end of the third quarter of 2016. ABAX has experienced a decrease in activity from the world’s largest hedge funds of late. There were 10 hedge funds in our database with ABAX positions at the end of the previous quarter. At the end of this article we will also compare ABAX to other stocks including Coherus Biosciences Inc (NASDAQ:CHRS), Brookfield Business Partners L.P. Limited Partnership Units(NYSE:BBU), and Engility Holdings Inc (NYSE:EGL) to get a better sense of its popularity.
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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.
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How have hedgies been trading Abaxis Inc (NASDAQ:ABAX)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ABAX over the last 5 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, Echo Street Capital Management, led by Greg Poole, holds the biggest position in Abaxis Inc (NASDAQ:ABAX). Echo Street Capital Management has a $11.3 million position in the stock. Sitting at the No. 2 spot is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $8.8 million position. Other members of the smart money that are bullish consist of Joel Greenblatt’s Gotham Asset Management, Peter Muller’s PDT Partners and Mark Coe’s Coe Capital Management. 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.
Seeing as Abaxis Inc (NASDAQ:ABAX) has experienced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds that decided to sell off their entire stakes in the third quarter. Intriguingly, Israel Englander’s Millennium Management cashed in the biggest stake of all the investors monitored by Insider Monkey, totaling close to $4.5 million in stock. D. E. Shaw’s D E Shaw, also dumped its stock, about $3 million worth.
Let’s check out hedge fund activity in other stocks similar to Abaxis Inc (NASDAQ:ABAX). These stocks are Coherus Biosciences Inc (NASDAQ:CHRS), Brookfield Business Partners L.P. Limited Partnership Units(NYSE:BBU), Engility Holdings Inc (NYSE:EGL), and Insight Enterprises, Inc. (NASDAQ:NSIT). This group of stocks’ market valuations match ABAX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHRS | 19 | 120944 | 5 |
| BBU | 4 | 21904 | -2 |
| EGL | 13 | 34454 | -1 |
| NSIT | 20 | 83759 | 5 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $26 million in ABAX’s case. Insight Enterprises, Inc. (NASDAQ:NSIT) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. Limited Partnership Units(NYSE:BBU) is the least popular one with only 4 bullish hedge fund positions. Abaxis Inc (NASDAQ:ABAX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NSIT might be a better candidate to consider taking a long position in.
Disclosure: None
