Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Abraxas Petroleum Corp. (NASDAQ:AXAS) going to take off soon? The best stock pickers are categorically getting more bullish. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings moved up by 2 lately. AXAS was in 7 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with AXAS positions at the end of the previous quarter. At the end of this article we will also compare AXAS to other stocks including Neff Corp (NYSE:NEFF), Park City Group, Inc. (NASDAQ:PCYG), and Concert Pharmaceuticals Inc (NASDAQ:CNCE) to get a better sense of its popularity.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Now, let’s take a gander at the latest action regarding Abraxas Petroleum Corp. (NASDAQ:AXAS).
What does the smart money think about Abraxas Petroleum Corp. (NASDAQ:AXAS)?
Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a jump of 40% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AXAS over the last 5 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, George McCabe’s Portolan Capital Management has the biggest position in Abraxas Petroleum Corp. (NASDAQ:AXAS), worth close to $10.5 million, corresponding to 1.4% of its total 13F portfolio. The second most bullish fund manager is Jeffrey Tannenbaum of Fir Tree, with a $3.7 million position; 0.2% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish contain Mark Coe’s Coe Capital Management, Mark Broach’s Manatuck Hill Partners and D E Shaw, one of the biggest hedge funds in the world. 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 one would reasonably expect, key money managers have jumped into Abraxas Petroleum Corp. (NASDAQ:AXAS) headfirst. Fir Tree, led by Jeffrey Tannenbaum, assembled the most valuable position in Abraxas Petroleum Corp. (NASDAQ:AXAS). Richard Driehaus’s Driehaus Capital also made a $0.1 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Abraxas Petroleum Corp. (NASDAQ:AXAS). These stocks are Neff Corp (NYSE:NEFF), Park City Group, Inc. (NASDAQ:PCYG), Concert Pharmaceuticals Inc (NASDAQ:CNCE), and Titan Machinery Inc. (NASDAQ:TITN). This group of stocks’ market caps are closest to AXAS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $18 million in AXAS’s case. Concert Pharmaceuticals Inc (NASDAQ:CNCE) is the most popular stock in this table. On the other hand Titan Machinery Inc. (NASDAQ:TITN) is the least popular one with only 4 bullish hedge fund positions. Abraxas Petroleum Corp. (NASDAQ:AXAS) 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 CNCE might be a better candidate to consider taking a long position in.