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Abraxas Petroleum Corp. (AXAS): Hedge Funds Didn’t Stick Around

In this article we will check out the progression of hedge fund sentiment towards Abraxas Petroleum Corp. (NASDAQ:AXAS) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Abraxas Petroleum Corp. (NASDAQ:AXAS) the right investment to pursue these days? Hedge funds are turning less bullish. The number of bullish hedge fund positions were trimmed by 2 recently. Our calculations also showed that AXAS 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Xiniya Earnings Call Transcript XNY 2014 Q3

New York Stock Exchange

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. Keeping this in mind we’re going to check out the key hedge fund action regarding Abraxas Petroleum Corp. (NASDAQ:AXAS).

What have hedge funds been doing with Abraxas Petroleum Corp. (NASDAQ:AXAS)?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in AXAS over the last 18 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 Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Abraxas Petroleum Corp. (NASDAQ:AXAS). Citadel Investment Group has a $0.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish include David Harding’s Winton Capital Management, Renaissance Technologies and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Abraxas Petroleum Corp. (NASDAQ:AXAS), around 0.0005% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, dishing out 0.0003 percent of its 13F equity portfolio to AXAS.

Due to the fact that Abraxas Petroleum Corp. (NASDAQ:AXAS) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that slashed their positions entirely last quarter. Interestingly, George McCabe’s Portolan Capital Management cut the biggest position of the 750 funds tracked by Insider Monkey, comprising close to $2.5 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $0.2 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Abraxas Petroleum Corp. (NASDAQ:AXAS). These stocks are ENGlobal Corp (NASDAQ:ENG), Manning and Napier Inc (NYSE:MN), Novan, Inc. (NASDAQ:NOVN), and Hexindai Inc. (NASDAQ:HX). This group of stocks’ market caps match AXAS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ENG 1 446 0
MN 8 3671 -2
NOVN 2 2146 1
HX 3 485 0
Average 3.5 1687 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.5 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $0 million in AXAS’s case. Manning and Napier Inc (NYSE:MN) is the most popular stock in this table. On the other hand ENGlobal Corp (NASDAQ:ENG) is the least popular one with only 1 bullish hedge fund positions. Abraxas Petroleum Corp. (NASDAQ:AXAS) is not the most popular stock in this group but hedge fund interest is still above average. 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 but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on AXAS as the stock returned 58.3% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.