What Hedge Funds Think About AXT Inc (AXTI)

After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards AXT Inc (NASDAQ:AXTI).

AXT Inc (NASDAQ:AXTI) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article we will also compare AXTI to other stocks, including BlueLinx Holdings Inc. (NYSE:BXC), RCS Capital Corp (NYSE:RCAP), and Quest Resource Holding Corp (NASDAQ:QRHC) to get a better sense of its popularity.

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At the moment there are several metrics shareholders use to evaluate publicly traded companies. A pair of the less utilized metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top fund managers can outpace their index-focused peers by a very impressive amount (see the details here).

Keeping this in mind, let’s check out the new action encompassing AXT Inc (NASDAQ:AXTI).

How have hedgies been trading AXT Inc (NASDAQ:AXTI)?

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

In this way, Chuck Royce’s Royce & Associates held the largest stake in AXTI among the funds we track, which was worth $1.30 million. Jim Simons’ Renaissance Technologies and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners come in next with positions valued at $0.8 million and $0.1 million respectively.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks similar to AXT Inc (NASDAQ:AXTI). We will take a look at BlueLinx Holdings Inc. (NYSE:BXC), RCS Capital Corp (NYSE:RCAP), Quest Resource Holding Corp (NASDAQ:QRHC), and ReachLocal Inc. (NASDAQ:RLOC). This group of stocks’ market caps are closest to AXTI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BXC 7 45941 -3
RCAP 15 16564 -4
QRHC 7 3094 0
RLOC 6 9842 -1

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 $19 million, while in AXTI’s case, that figure stood at $9 million. RCS Capital Corp (NYSE:RCAP) is the most popular stock in this table. On the other hand ReachLocal Inc. (NASDAQ:RLOC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks AXT Inc (NASDAQ:AXTI) is even less popular than RLOC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.