Here is What Hedge Funds Think About AxoGen, Inc. (AXGN)

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 8.7% through October 26th. Forty percent of the S&P 500 constituents were down more than 10%. The average return of a randomly picked stock in the index is -9.5%. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 25 most popular S&P 500 stocks among hedge funds had an average loss of 8.8%. In this article, we will take a look at what hedge funds think about AxoGen, Inc. (NASDAQ:AXGN).

Is AxoGen, Inc. (NASDAQ:AXGN) a splendid investment right now? Hedge funds are becoming less confident. The number of bullish hedge fund positions fell by 1 in recent months. Our calculations also showed that axgn isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Richard Driehaus

Let’s view the key hedge fund action surrounding AxoGen, Inc. (NASDAQ:AXGN).

How have hedgies been trading AxoGen, Inc. (NASDAQ:AXGN)?

Heading into the fourth quarter of 2018, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the second quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in AXGN at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with AXGN Positions

Among these funds, Opaleye Management held the most valuable stake in AxoGen, Inc. (NASDAQ:AXGN), which was worth $47.9 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $39.8 million worth of shares. Moreover, Renaissance Technologies, Rock Springs Capital Management, and Driehaus Capital were also bullish on AxoGen, Inc. (NASDAQ:AXGN), allocating a large percentage of their portfolios to this stock.

Since AxoGen, Inc. (NASDAQ:AXGN) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their positions entirely by the end of the third quarter. At the top of the heap, Brian Ashford-Russell and Tim Woolley’s Polar Capital sold off the largest investment of all the hedgies tracked by Insider Monkey, comprising about $13.1 million in stock. Joseph Edelman’s fund, Perceptive Advisors, also dumped its stock, about $8.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AxoGen, Inc. (NASDAQ:AXGN) but similarly valued. We will take a look at Ferroglobe PLC (NASDAQ:GSM), ImmunoGen, Inc. (NASDAQ:IMGN), Sibanye Gold Ltd (NYSE:SBGL), and Unit Corporation (NYSE:UNT). All of these stocks’ market caps are similar to AXGN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GSM 17 164584 0
IMGN 18 288017 5
SBGL 12 8798 2
UNT 10 22052 -1
Average 14.25 120863 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $171 million in AXGN’s case. ImmunoGen, Inc. (NASDAQ:IMGN) is the most popular stock in this table. On the other hand Unit Corporation (NYSE:UNT) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks AxoGen, Inc. (NASDAQ:AXGN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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