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Is Axonics Modulation Technologies, Inc. (AXNX) Going to Burn These Hedge Funds?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Axonics Modulation Technologies, Inc. (NASDAQ:AXNX).

Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) investors should be aware of a decrease in enthusiasm from smart money recently. AXNX was in 22 hedge funds’ portfolios at the end of the first quarter of 2020. There were 23 hedge funds in our database with AXNX positions at the end of the previous quarter. Our calculations also showed that AXNX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

At the moment there are several tools stock market investors put to use to assess stocks. A duo of the most underrated tools are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite money managers can beat the broader indices by a superb amount (see the details here).

James Flynn Deerfield Management

James E. Flynn of Deerfield Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the key hedge fund action regarding Axonics Modulation Technologies, Inc. (NASDAQ:AXNX).

How have hedgies been trading Axonics Modulation Technologies, Inc. (NASDAQ:AXNX)?

Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the fourth quarter of 2019. On the other hand, there were a total of 10 hedge funds with a bullish position in AXNX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AXNX A Good Stock To Buy?

More specifically, Deerfield Management was the largest shareholder of Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), with a stake worth $45.6 million reported as of the end of September. Trailing Deerfield Management was Redmile Group, which amassed a stake valued at $38.3 million. Polar Capital, Point72 Asset Management, and Cormorant Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Blackcrane Capital allocated the biggest weight to Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), around 17.43% of its 13F portfolio. Parian Global Management is also relatively very bullish on the stock, dishing out 5.62 percent of its 13F equity portfolio to AXNX.

Because Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of money managers that decided to sell off their full holdings last quarter. It’s worth mentioning that Christopher James’s Partner Fund Management cut the biggest investment of the 750 funds watched by Insider Monkey, valued at close to $15.2 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $12.7 million worth. These transactions are important to note, as total hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) but similarly valued. These stocks are Stratasys, Ltd. (NASDAQ:SSYS), Schweitzer-Mauduit International, Inc. (NYSE:SWM), SeaWorld Entertainment Inc (NYSE:SEAS), and Encore Wire Corporation (NASDAQ:WIRE). This group of stocks’ market valuations resemble AXNX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SSYS 14 60722 -4
SWM 10 25342 -3
SEAS 27 455794 -12
WIRE 14 33051 1
Average 16.25 143727 -4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $282 million in AXNX’s case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand Schweitzer-Mauduit International, Inc. (NYSE:SWM) is the least popular one with only 10 bullish hedge fund positions. Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on AXNX as the stock returned 49.5% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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