The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Axon Enterprise, Inc. (NASDAQ:AXON) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Axon Enterprise, Inc. (NASDAQ:AXON) shareholders have witnessed an increase in enthusiasm from smart money of late. Axon Enterprise, Inc. (NASDAQ:AXON) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. Our calculations also showed that AXON isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to view the latest hedge fund action surrounding Axon Enterprise, Inc. (NASDAQ:AXON).
Colin Moran of Abdiel Capital Advisors
Do Hedge Funds Think AXON Is A Good Stock To Buy Now?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in AXON a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Axon Enterprise, Inc. (NASDAQ:AXON) was held by Broadwood Capital, which reported holding $133 million worth of stock at the end of September. It was followed by Abdiel Capital Advisors with a $115.6 million position. Other investors bullish on the company included Motley Fool Asset Management, GLG Partners, and Driehaus Capital. In terms of the portfolio weights assigned to each position Broadwood Capital allocated the biggest weight to Axon Enterprise, Inc. (NASDAQ:AXON), around 6.78% of its 13F portfolio. Motley Fool Asset Management is also relatively very bullish on the stock, designating 3.3 percent of its 13F equity portfolio to AXON.
As industrywide interest jumped, specific money managers have jumped into Axon Enterprise, Inc. (NASDAQ:AXON) headfirst. Intrinsic Edge Capital, managed by Mark Coe, initiated the largest position in Axon Enterprise, Inc. (NASDAQ:AXON). Intrinsic Edge Capital had $6.8 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $1.7 million position during the quarter. The other funds with brand new AXON positions are Matthew Hulsizer’s PEAK6 Capital Management, Michael Gelband’s ExodusPoint Capital, and Peter Algert’s Algert Global.
Let’s also examine hedge fund activity in other stocks similar to Axon Enterprise, Inc. (NASDAQ:AXON). These stocks are Lamar Advertising Company (NASDAQ:LAMR), Natura &Co Holding S.A. (NYSE:NTCO), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Regency Centers Corp (NASDAQ:REG), Cna Financial Corporation (NYSE:CNA), Penn National Gaming, Inc (NASDAQ:PENN), and Western Alliance Bancorporation (NYSE:WAL). All of these stocks’ market caps are similar to AXON’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAMR | 30 | 445462 | -2 |
| NTCO | 6 | 46852 | 1 |
| CHRW | 20 | 287994 | -11 |
| REG | 19 | 158467 | -6 |
| CNA | 12 | 63809 | -1 |
| PENN | 38 | 1080780 | -2 |
| WAL | 29 | 291818 | 1 |
| Average | 22 | 339312 | -2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $339 million. That figure was $530 million in AXON’s case. Penn National Gaming, Inc (NASDAQ:PENN) is the most popular stock in this table. On the other hand Natura &Co Holding S.A. (NYSE:NTCO) is the least popular one with only 6 bullish hedge fund positions. Axon Enterprise, Inc. (NASDAQ:AXON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AXON is 75.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, AXON wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AXON were disappointed as the stock returned -20% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
