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Should You Buy Anavex Life Sciences Corp. (AVXL)?

In this article we will take a look at whether hedge funds think Anavex Life Sciences Corp. (NASDAQ:AVXL) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Anavex Life Sciences Corp. (NASDAQ:AVXL) shareholders have witnessed an increase in support from the world’s most elite money managers of late. Our calculations also showed that AVXL 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind we’re going to take a look at the recent hedge fund action regarding Anavex Life Sciences Corp. (NASDAQ:AVXL).

What does smart money think about Anavex Life Sciences Corp. (NASDAQ:AVXL)?

Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AVXL over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Anavex Life Sciences Corp. (NASDAQ:AVXL) was held by Knoll Capital Management, which reported holding $2.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $1.3 million position. Other investors bullish on the company included Millennium Management, D E Shaw, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Knoll Capital Management allocated the biggest weight to Anavex Life Sciences Corp. (NASDAQ:AVXL), around 2.14% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to AVXL.

As industrywide interest jumped, specific money managers were breaking ground themselves. AQR Capital Management, managed by Cliff Asness, created the biggest position in Anavex Life Sciences Corp. (NASDAQ:AVXL). AQR Capital Management had $0.1 million invested in the company at the end of the quarter. Jeffrey Gendell’s Tontine Asset Management also made a $0.1 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks similar to Anavex Life Sciences Corp. (NASDAQ:AVXL). These stocks are Hooker Furniture Corporation (NASDAQ:HOFT), ChoiceOne Financial Services, Inc. (NASDAQ:COFS), Venator Materials PLC (NYSE:VNTR), and Golden Entertainment Inc (NASDAQ:GDEN). This group of stocks’ market values are similar to AVXL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HOFT 10 51757 1
COFS 2 1143 2
VNTR 11 23501 -6
GDEN 13 35561 -3
Average 9 27991 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $4 million in AVXL’s case. Golden Entertainment Inc (NASDAQ:GDEN) is the most popular stock in this table. On the other hand ChoiceOne Financial Services, Inc. (NASDAQ:COFS) is the least popular one with only 2 bullish hedge fund positions. Anavex Life Sciences Corp. (NASDAQ:AVXL) is not the least popular stock in this group but hedge fund interest is still below 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 and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on AVXL as the stock returned 28.9% during the second quarter and outperformed the market by an even larger margin.

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