Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Anixter International Inc. (NYSE:AXE) .
Hedge fund interest in Anixter International Inc. (NYSE:AXE) shares was flat at the end of last quarter. This is usually a negative indicator. 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 M/A-COM Technology Solutions Holdings (NASDAQ:MTSI), Triumph Group Inc (NYSE:TGI), and ExlService Holdings, Inc. (NASDAQ:EXLS) to gather more data points.
With all of this in mind, we’re going to view the key action encompassing Anixter International Inc. (NYSE:AXE).
Hedge fund activity in Anixter International Inc. (NYSE:AXE)
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. The graph below displays the number of hedge funds with bullish position in AXE over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Ariel Investments, led by John W. Rogers, holds the largest position in Anixter International Inc. (NYSE:AXE). Ariel Investments has a $170.6 million position in the stock, comprising 2.1% of its 13F portfolio. Coming in second is Diamond Hill Capital, led by Ric Dillon, which holds a $46.4 million position. Remaining members of the smart money that hold long positions comprise Martin Whitman’s Third Avenue Management, Ken Fisher’s Fisher Asset Management and Chuck Royce’s Royce & Associates. 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.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually cut their positions entirely. At the top of the heap, Barry Lebovits and Joshua Kuntz’s Rivulet Capital cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling close to $2.7 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund said goodbye to about $0.9 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to Anixter International Inc. (NYSE:AXE). We will take a look at M/A-COM Technology Solutions Holdings (NASDAQ:MTSI), Triumph Group Inc (NYSE:TGI), ExlService Holdings, Inc. (NASDAQ:EXLS), and Evercore Partners Inc. (NYSE:EVR). This group of stocks’ market valuations are closest to AXE’s market valuation.
|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 15 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $468 million in AXE’s case. Evercore Partners Inc. (NYSE:EVR) is the most popular stock in this table. On the other hand ExlService Holdings, Inc. (NASDAQ:EXLS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Anixter International Inc. (NYSE:AXE) 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.