A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell’s pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Anixter International Inc. (NYSE:AXE) during the quarter.
Anixter International Inc. (NYSE:AXE) was in 23 hedge funds’ portfolios at the end of March. AXE investors should pay attention to an increase in hedge fund interest lately. There were 14 hedge funds in our database with AXE holdings at the end of the previous quarter. Our calculations also showed that axe 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the recent hedge fund action surrounding Anixter International Inc. (NYSE:AXE).
Hedge fund activity in Anixter International Inc. (NYSE:AXE)
Heading into the second quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 64% from the fourth quarter of 2018. On the other hand, there were a total of 15 hedge funds with a bullish position in AXE a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Anixter International Inc. (NYSE:AXE) was held by Pzena Investment Management, which reported holding $105 million worth of stock at the end of March. It was followed by Ariel Investments with a $43.9 million position. Other investors bullish on the company included Fisher Asset Management, Royce & Associates, and D E Shaw.
Consequently, specific money managers have been driving this bullishness. GLG Partners, managed by Noam Gottesman, established the biggest position in Anixter International Inc. (NYSE:AXE). GLG Partners had $5.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $4.3 million investment in the stock during the quarter. The following funds were also among the new AXE investors: John Overdeck and David Siegel’s Two Sigma Advisors, Alexander Roepers’s Atlantic Investment Management, and Jim Simons’s Renaissance Technologies.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Anixter International Inc. (NYSE:AXE) but similarly valued. These stocks are Seaspan Corporation (NYSE:SSW), Bloomin’ Brands Inc (NASDAQ:BLMN), Trinseo S.A. (NYSE:TSE), and CRISPR Therapeutics AG (NASDAQ:CRSP). This group of stocks’ market caps are similar to AXE’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 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $314 million. That figure was $258 million in AXE’s case. Bloomin’ Brands Inc (NASDAQ:BLMN) is the most popular stock in this table. On the other hand Seaspan Corporation (NYSE:SSW) is the least popular one with only 9 bullish hedge fund positions. Anixter International Inc. (NYSE:AXE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately AXE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AXE were disappointed as the stock returned -2.1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.