Hedge Funds Are Betting On Axis Capital Holdings Limited (AXS)

At Insider Monkey, we track over 700 of the most successful hedge funds in the world and analyze their top stock picks so as to gain insight into their collective buying habits. Despite redemptions totaling about $67 billion this year, hedge funds’ assets under management have risen to $3.24 trillion thanks to gains of 5.44% this year. While hedge funds continue to underperform the market, we have found that they excel at picking stocks on the long side of their portfolios, while generally not faring as well with their other investments, which drags down their overall returns. For example, their top-30 mid-cap stock picks delivered 18% returns during the 12-month period ended November 21, 2016, while the S&P 500 Index posted gains of less than half that (7.6%). This is why we share the top picks and trends among the group of hedge funds that we follow with readers, and why in this article, we’ll see how they’ve recently traded Axis Capital Holdings Limited (NYSE:AXS).

Axis Capital Holdings Limited (NYSE:AXS) was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. AXS investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 11 hedge funds in our database with AXS holdings at the end of the previous quarter. At the end of this article we will also compare AXS to other stocks including People’s United Financial, Inc. (NASDAQ:PBCT), Toll Brothers Inc (NYSE:TOL), and Tesoro Logistics LP (NYSE:TLLP) to get a better sense of its popularity.

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How are hedge funds trading Axis Capital Holdings Limited (NYSE:AXS)?

Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 18% from the second quarter of 2016. On the other hand, there were a total of 20 hedge funds with a bullish position in AXS at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HedgeFundSentimentChart (117)

When looking at the institutional investors followed by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the number one position in Axis Capital Holdings Limited (NYSE:AXS), worth close to $265 million, accounting for 1.6% of its total 13F portfolio. On Pzena Investment Management’s heels is AQR Capital Management, led by Cliff Asness, holding a $96.3 million position. Other members of the smart money with similar optimism contain Renaissance Technologies,  one of the largest hedge funds in the world, D. E. Shaw’s D E Shaw and Dmitry Balyasny’s Balyasny 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 industrywide interest jumped, some big names have been driving this bullishness. Millennium Management established the most outsized position in Axis Capital Holdings Limited (NYSE:AXS). Millennium Management had $12 million invested in the company at the end of the quarter. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital also made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new AXS position is Andrew Weiss’s Weiss Asset Management.

Let’s now review hedge fund activity in other stocks similar to Axis Capital Holdings Limited (NYSE:AXS). These stocks are People’s United Financial, Inc. (NASDAQ:PBCT), Toll Brothers Inc (NYSE:TOL), Tesoro Logistics LP (NYSE:TLLP), and CubeSmart (NYSE:CUBE). All of these stocks’ market caps are similar to AXS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PBCT 12 54291 -5
TOL 29 329585 1
TLLP 6 24745 -3
CUBE 17 206002 0

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $482 million in AXS’s case. Toll Brothers Inc (NYSE:TOL) is the most popular stock in this table. On the other hand Tesoro Logistics LP (NYSE:TLLP) is the least popular one with only 6 bullish hedge fund positions. Axis Capital Holdings Limited (NYSE:AXS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TOL might be a better candidate to consider taking a long position in.

Disclosure: None