Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Vereit Inc (NYSE:VER).
Hedge fund interest in Vereit Inc (NYSE:VER) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare VER to other stocks, including Skechers USA Inc (NYSE:SKX), Gartner Inc (NYSE:IT), and Williams-Sonoma, Inc. (NYSE:WSM) to get a better sense of its popularity.
Follow Vereit Inc. (NYSE:VER)
Follow Vereit Inc. (NYSE:VER)
To most shareholders, hedge funds are seen as unimportant, old financial tools of years past. While there are greater than 8000 funds in operation today, We look at the elite of this club, around 700 funds. It is estimated that this group of investors command most of the smart money’s total asset base, and by monitoring their first-class picks, Insider Monkey has uncovered a number of investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, we’re going to view the recent action surrounding Vereit Inc (NYSE:VER).
What does the smart money think about Vereit Inc (NYSE:VER)?
At Q3’s end, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Keith Meister’s Corvex Capital has the biggest position in Vereit Inc (NYSE:VER), worth close to $622.3 million, accounting for 7.3% of its total 13F portfolio. Sitting at the No. 2 spot is Glenview Capital, led by Larry Robbins, holding a $172.8 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Jonathan Kolatch’s Redwood Capital Management, David Simon’s Twin Capital Management, and Matthew Halbower’s Pentwater Capital Management.
Due to the fact that Vereit Inc (NYSE:VER) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Jamie Zimmerman’s Litespeed Management dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling close to $29.7 million in stock, and Eric Edidin and Josh Lobel’s Archer Capital Management was right behind this move, as the fund dropped about $22.6 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Vereit Inc (NYSE:VER). These stocks are Skechers USA Inc (NYSE:SKX), Gartner Inc (NYSE:IT), Williams-Sonoma, Inc. (NYSE:WSM), and Plum Creek Timber Co. Inc. (NYSE:PCL). This group of stocks’ market values are closest to VER’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SKX | 36 | 599889 | 6 |
| IT | 16 | 173175 | 2 |
| WSM | 24 | 502868 | -1 |
| PCL | 16 | 612867 | 2 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $472 million. That figure was $1.48 billion in VER’s case. Skechers USA Inc (NYSE:SKX) is the most popular stock in this table with 36 long positions. On the other hand Gartner Inc (NYSE:IT) is the least popular one with only 16 funds reporting stakes. Compared to these stocks Vereit Inc (NYSE:VER) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
