Advaxis, Inc. (NASDAQ:ADXS) is a biotechnology company which focuses on developing drug technology for treating Cancer. Alongside many other biotech stocks, Advaxis, Inc. (NASDAQ:ADXS)’s shares surged by 108% so far in 2015. However, in the last 30 days, the stock is down by 25%. Today, Advaxis is down by around 10%, after jumping by 17% on Tuesday. There have been no major market moving news to effect such a swing in the stock prices. On Monday, the company announced that its CEO, Daniel O’Connor, was selected as the winner of 2015 Ernst Young Entrepreneur of the Year in New Jersey, which doesn’t seem to explain the 17% gain on Tuesday. This indicates that the stock is highly volatile since it moves up and down in the absence of any market moving news. But what do hedge funds think about Advaxis?
Many analysts have initiated their coverage on the stock in the last two months as Advaxis’ therapeutic Cancer immunotherapies started gaining a lot of attention. Analysts from HC Wainright, MLV Co, Jefferies Group Janney Montgomery set a ‘Buy’ rating on Advaxis, Inc. (NASDAQ:ADXS) with price targets ranging from $25 to $34.
Most investors don’t understand hedge funds and indicators that are based on hedge fund and insider activity. They ignore hedge funds because of their recent poor performance in the long-running bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns enjoyed (or not) by investors. We uncovered through extensive research that hedge funds’ long positions in small-cap stocks actually greatly outperformed the market from 1999 to 2012, and built a system around this. The 15 most popular small-cap stocks among funds beat the SP 500 Index by more than 84 percentage points since the end of August 2012 when this system went live, returning a cumulative 135% compared to less than 55% for the SP 500 ETF (SPY) (read the details). Likewise, other research (not our own) has shown insider purchases are also effective piggybacking methods for investors that lead to greater returns. That’s why we believe investors should pay attention to what hedge funds and insiders are buying and keep them apprised of this information.
Heading into the second quarter, there were 12 hedge funds holding long positions in Advaxis, Inc. (NASDAQ:ADXS) with a total investment of $123.6 million, up from eight funds with $51.9 million at the end of 2014. The aggregate capital invested by hedge funds in the stock has increased by a whopping 138%. Considering the fact that the stock gained 60% in the first trimester, we can say that hedge funds are bullish on the Advaxis.
Let’s take a look at the insider activity surrounding the company. Insiders did not sell any shares of Advaxis, Inc. (NASDAQ:ADXS) since the beginning of the year, but there was a notable insider purchase of the stock. One of the largest shareholder at Advaxis, Inc. (NASDAQ:ADXS) is the hedge fund Adage Capital Management managed by Phill Gross and Robert Atchinson. Adage Capital Management acquired around 1.2 million shares in February and April.
What does the smart money think about Advaxis, Inc. (NASDAQ:ADXS)?
Among the hedge funds tracked by Insider Monkey, As of March 31, Adage Capital Management held the largest position in Advaxis, Inc. (NASDAQ:ADXS) and including the purchase of 500,000 shares in April, it holds around 5.64 million shares of Advaxis. Following Adage Capital management is Bihua Chen’s Cormorant Asset Management with around 975,000 shares at the end of March.
Since the number of hedge funds holding the stock went up in the first trimester, a number of investors initiated stakes. Among them is Kevin Kotler‘s Broadfin Capital, which acquired around 806,000 shares in the first three months. Samule Isaly‘s OrbiMed Advisors also initiated a position in the stock that contains 430,000 shares. There were a couple of hedge funds managers who sold out their entire stakes in the Advaxis, including Michael Castor’s SIO Capital and Ken Griffin‘s Citadel Investment Group.
Hedge funds remained bullish on Advaxis, Inc. (NASDAQ:ADXS) through the first quarter and they were right to do so as the stock surged year-to-date. In addition, analysts initiated coverage on this stock with a ‘Buy’ rating. All the positive signs indicate that this stock is a good investment despite the high volatility.
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