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.
Advaxis, Inc. (NASDAQ:ADXS) has experienced a decrease in activity from the world’s largest hedge funds lately. 14 hedge funds that we track were long the stock on September 30. There were 17 hedge funds in our database with ADXS positions at the end of the June quarter. At the end of this article we will also compare ADXS to other stocks including Digi International Inc. (NASDAQ:DGII), AV Homes Inc (NASDAQ:AVHI), and Consolidated-Tomoka Land Co. (NYSEAMEX:CTO) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How are hedge funds trading Advaxis, Inc. (NASDAQ:ADXS)?
Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 18% drop from the second quarter of 2016, as hedge fund sentiment trends down again after a Q2 boost. By comparison, 15 hedge funds held shares or bullish call options in ADXS heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Adage Capital Management, led by Phill Gross and Robert Atchinson, holds the number one position in Advaxis, Inc. (NASDAQ:ADXS). Adage Capital Management has a $63.5 million position in the stock. Coming in second is Broadfin Capital, led by Kevin Kotler, holding a $16.7 million position; 1.5% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions comprise Bihua Chen’s Cormorant Asset Management, Alex Denner’s Sarissa Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP. We should note that Sarissa Capital Management is 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.
Due to the fact that Advaxis, Inc. (NASDAQ:ADXS) has encountered falling interest from the smart money, we can see that there exists a select few fund managers that decided to sell off their full holdings last quarter. Interestingly, Samuel Isaly’s OrbiMed Advisors sold off the biggest position of the 700 funds tracked by Insider Monkey, worth close to $3.6 million in stock. Oleg Nodelman’s fund, EcoR1 Capital, also dumped its stock, about $0.8 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Advaxis, Inc. (NASDAQ:ADXS) but similarly valued. We will take a look at Digi International Inc. (NASDAQ:DGII), AV Homes Inc (NASDAQ:AVHI), Consolidated-Tomoka Land Co. (NYSEAMEX:CTO), and Daktronics, Inc. (NASDAQ:DAKT). This group of stocks’ market caps match ADXS’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 10 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $116 million in ADXS’s case. Digi International Inc. (NASDAQ:DGII) is the most popular stock in this table. On the other hand AV Homes Inc (NASDAQ:AVHI) is the least popular one with only 3 bullish hedge fund positions. Advaxis, Inc. (NASDAQ:ADXS) 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 recently. In this regard DAKT might be a better candidate to consider taking a long position in.