Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Accelerate Diagnostics Inc (NASDAQ:AXDX) and see how the stock is affected by the recent hedge fund activity.
Accelerate Diagnostics Inc (NASDAQ:AXDX) was in 11 hedge funds’ portfolios at the end of September. AXDX shareholders have witnessed a decrease in support from the world’s most elite money managers of late. There were 14 hedge funds in our database with AXDX holdings at the end of the previous quarter. 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 National Bank Holdings Corp (NYSE:NBHC), Kronos Worldwide, Inc. (NYSE:KRO), and Employers Holdings, Inc. (NYSE:EIG) to gather more data points.
If you’d ask most traders, hedge funds are assumed to be slow, old investment vehicles of years past. While there are more than 8,000 funds in operation at present, We hone in on the masters of this group, approximately 700 funds. These money managers command most of the hedge fund industry’s total capital, and by following their top equity investments, Insider Monkey has uncovered many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, let’s analyze the latest action surrounding Accelerate Diagnostics Inc (NASDAQ:AXDX).
What does the smart money think about Accelerate Diagnostics Inc (NASDAQ:AXDX)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Matthew Strobeck’s Birchview Capital has the largest position in Accelerate Diagnostics Inc (NASDAQ:AXDX), worth close to $33.5 million, comprising 20% of its total 13F portfolio. On Birchview Capital’s heels is Miura Global Management, managed by Pasco Alfaro / Richard Tumure, which holds a $9.7 million position; 0.5% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions contain Stewart Strawbridge’s Selkirk Management, Stuart Weisbrod’s Iguana Healthcare Management and Israel Englander’s Millennium Management.
Due to the fact that Accelerate Diagnostics Inc (NASDAQ:AXDX) has witnessed bearish sentiment from hedge fund managers, we can see that there is a sect of money managers that elected to cut their entire stakes in the third quarter. Interestingly, Drew Cupps’s Cupps Capital Management cut the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $2.8 million in stock. Richard Driehaus’s fund, Driehaus Capital, also cut its stock, about $1.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Accelerate Diagnostics Inc (NASDAQ:AXDX) but similarly valued. These stocks are National Bank Holdings Corp (NYSE:NBHC), Kronos Worldwide, Inc. (NYSE:KRO), Employers Holdings, Inc. (NYSE:EIG), and Meridian Bioscience, Inc. (NASDAQ:VIVO). This group of stocks’ market caps match AXDX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NBHC | 12 | 134438 | 1 |
| KRO | 6 | 1809 | -1 |
| EIG | 16 | 57566 | 2 |
| VIVO | 15 | 44627 | -2 |
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $57 million in AXDX’s case. Employers Holdings, Inc. (NYSE:EIG) is the most popular stock in this table. On the other hand Kronos Worldwide, Inc. (NYSE:KRO) is the least popular one with only 6 bullish hedge fund positions. Accelerate Diagnostics Inc (NASDAQ:AXDX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EIG might be a better candidate to consider a long position.
