At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Alexco Resource Corp. (NYSE:AXU).
Is Alexco Resource Corp. (NYSE:AXU) the right pick for your portfolio? Prominent investors are taking an optimistic view. The number of long hedge fund bets advanced by 2 recently. Our calculations also showed that AXU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). AXU was in 4 hedge funds’ portfolios at the end of March. There were 2 hedge funds in our database with AXU positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are assumed to be slow, outdated financial tools of years past. While there are more than 8000 funds with their doors open at the moment, We hone in on the aristocrats of this club, around 850 funds. These hedge fund managers direct the lion’s share of all hedge funds’ total asset base, and by tracking their highest performing investments, Insider Monkey has deciphered a few investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s check out the key hedge fund action regarding Alexco Resource Corp. (NYSE:AXU).
What have hedge funds been doing with Alexco Resource Corp. (NYSE:AXU)?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AXU over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Sprott Asset Management, managed by Eric Sprott, holds the largest position in Alexco Resource Corp. (NYSE:AXU). Sprott Asset Management has a $0.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish encompass Israel Englander’s Millennium Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Alexco Resource Corp. (NYSE:AXU), around 0.04% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.0001 percent of its 13F equity portfolio to AXU.
As one would reasonably expect, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, created the most valuable position in Alexco Resource Corp. (NYSE:AXU). Millennium Management had $0.1 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.1 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Alexco Resource Corp. (NYSE:AXU) but similarly valued. These stocks are Denison Mines Corp (NYSE:DNN), RADA Electronic Industries Ltd. (NASDAQ:RADA), Regional Management Corp (NYSE:RM), and The Joint Corp. (NASDAQ:JYNT). This group of stocks’ market valuations are closest to AXU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DNN | 4 | 2045 | 0 |
| RADA | 6 | 7927 | 3 |
| RM | 11 | 41732 | -1 |
| JYNT | 15 | 43985 | 0 |
| Average | 9 | 23922 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $1 million in AXU’s case. The Joint Corp. (NASDAQ:JYNT) is the most popular stock in this table. On the other hand Denison Mines Corp (NYSE:DNN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Alexco Resource Corp. (NYSE:AXU) is even less popular than DNN. Hedge funds clearly dropped the ball on AXU as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on AXU as the stock returned 87.7% so far in the second quarter and outperformed the market by an even larger margin.
Follow Alexco Resource Corp (NYSE:AXU)
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Disclosure: None. This article was originally published at Insider Monkey.
