The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) based on those filings.
American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) has seen a decrease in hedge fund interest lately. Our calculations also showed that AXL 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
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 trades like this one. 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. Now we’re going to take a look at the new hedge fund action surrounding American Axle & Manufacturing Holdings, Inc. (NYSE:AXL).
How have hedgies been trading American Axle & Manufacturing Holdings, Inc. (NYSE:AXL)?
Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AXL over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), which was worth $10.5 million at the end of the third quarter. On the second spot was Millennium Management which amassed $4.9 million worth of shares. Whitebox Advisors, Redwood Capital Management, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Redwood Capital Management allocated the biggest weight to American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), around 0.74% of its 13F portfolio. Ellington is also relatively very bullish on the stock, setting aside 0.66 percent of its 13F equity portfolio to AXL.
Due to the fact that American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) has experienced declining sentiment from the smart money, it’s easy to see that there was a specific group of money managers that slashed their full holdings in the first quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management cut the largest investment of the 750 funds watched by Insider Monkey, comprising an estimated $11.3 million in stock, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management was right behind this move, as the fund dumped about $4.4 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds in the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) but similarly valued. These stocks are Bank of Marin Bancorp (NASDAQ:BMRC), Banc of California, Inc. (NYSE:BANC), Crescent Point Energy Corp (NYSE:CPG), and Green Brick Partners Inc (NASDAQ:GRBK). All of these stocks’ market caps are closest to AXL’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $44 million in AXL’s case. Green Brick Partners Inc (NASDAQ:GRBK) is the most popular stock in this table. On the other hand Bank of Marin Bancorp (NASDAQ:BMRC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on AXL as the stock returned 130.2% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.