The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Axovant Sciences Ltd (NYSE:AXON) from the perspective of those successful funds.
Axovant Sciences Ltd (NYSE:AXON) has seen an increase in hedge fund sentiment recently. There were 20 hedge funds in our database with AXON holdings at the end of September, compared to 14 funds a quarter earlier. At the end of this article we will also compare AXON to other stocks including BroadSoft Inc (NASDAQ:BSFT), Capital Bank Financial Corp (NASDAQ:CBF), and Yirendai Ltd – ADR(NYSE:YRD) to get a better sense of its popularity.
Follow Sio Gene Therapies Inc. (NASDAQ:SIOX)
Follow Sio Gene Therapies Inc. (NASDAQ:SIOX)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
RAJ CREATIONZS / shutterstock.com
With all of this in mind, let’s check out the recent action regarding Axovant Sciences Ltd (NYSE:AXON).
What have hedge funds been doing with Axovant Sciences Ltd (NYSE:AXON)?
At the end of the third quarter, 20 hedge funds tracked by Insider Monkey were long Axovant Sciences Ltd (NYSE:AXON), a change of 43% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AXON over the last five quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Daniel Gold’s QVT Financial holds the biggest position in Axovant Sciences Ltd (NYSE:AXON). QVT Financial has a $1.05 billion position in the stock, comprising 39.6% of its 13F portfolio. Coming in second is RA Capital Management, led by Peter Kolchinsky, holding a $70 million position; the fund has 7.2% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Steve Cohen’s Point72 Asset 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.
As aggregate interest increased, key money managers were leading the bulls’ herd. QVT Financial created the most outsized position in Axovant Sciences Ltd (NYSE:AXON). Steve Cohen’s Point72 Asset Management also made a $9 million investment in the stock during the quarter. The following funds were also among the new AXON investors: James E. Flynn’s Deerfield Management, Hal Mintz’s Sabby Capital, and Zach Schreiber’s Point State Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Axovant Sciences Ltd (NYSE:AXON) but similarly valued. These stocks are BroadSoft Inc (NASDAQ:BSFT), Capital Bank Financial Corp (NASDAQ:CBF), Yirendai Ltd – ADR(NYSE:YRD), and 8×8, Inc. (NASDAQ:EGHT). This group of stocks’ market values match AXON’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSFT | 13 | 104928 | -6 |
| CBF | 7 | 17378 | 1 |
| YRD | 5 | 2263 | 3 |
| EGHT | 20 | 163366 | 3 |
As you can see these stocks had an average of 11 investors with bullish positions and the average amount invested in these stocks was $72 million. That figure was $1199 million in AXON’s case. 8×8, Inc. (NASDAQ:EGHT) is the most popular stock in this table. On the other hand Yirendai Ltd – ADR (NYSE:YRD) is the least popular one with only five bullish hedge fund positions. Axovant Sciences Ltd (NYSE:AXON) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard 8×8, Inc. (NASDAQ:EGHT) might be a better candidate to consider taking a long position in.
Disclosure: none
