Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Axis Capital Holdings Limited (NYSE:AXS) investors should be aware of an increase in activity from the world’s largest hedge funds of late. Axis Capital Holdings Limited (NYSE:AXS) was in 25 hedge funds’ portfolios at the end of September. There were 24 hedge funds in our database with Axis Capital Holdings Limited (NYSE:AXS) holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Pilgrim’s Pride Corporation (NASDAQ:PPC), and Wynn Resorts, Limited (NASDAQ:WYNN) to gather more data points.
If you’d ask most shareholders, hedge funds are seen as slow, outdated investment tools of years past. While there are greater than 8000 funds in operation at present, Our researchers choose to focus on the bigwigs of this club, about 700 funds. These investment experts handle the majority of all hedge funds’ total capital, and by monitoring their best equity investments, Insider Monkey has identified a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, let’s take a look at the recent action surrounding Axis Capital Holdings Limited (NYSE:AXS).
What does the smart money think about Axis Capital Holdings Limited (NYSE:AXS)?
Heading into Q4, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 4% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the most valuable position in Axis Capital Holdings Limited (NYSE:AXS), worth close to $315.4 million, comprising 2% of its total 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $85.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’ AQR Capital Management, and Renaissance Technologies.
As industrywide interest jumped, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in Axis Capital Holdings Limited (NYSE:AXS). Arrowstreet Capital had $12.4 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $3.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Lawrence Sapanski’s Scoria Capital, and Chao Ku’s Nine Chapters Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Axis Capital Holdings Limited (NYSE:AXS) but similarly valued. We will take a look at Pilgrim’s Pride Corporation (NASDAQ:PPC), Wynn Resorts, Limited (NASDAQ:WYNN), and Targa Resources Partners LP (NYSE:NGLS). This group of stocks’ market caps is closest to Axis Capital Holdings Limited (NYSE:AXS)’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 26 hedge funds with bullish positions and the average amount invested in these stocks was $567 million. That figure was $583 million in Axis Capital Holdings Limited (NYSE:AXS)’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand, Targa Resources Partners LP (NYSE:NGLS) is the least popular one with only 7 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, Wynn Resorts, Limited (NASDAQ:WYNN) might be a better candidate to consider a long position.