5 Best Undervalued Small-Cap Stocks According to Hedge Funds

4. Victory Capital Holdings, Inc. (NASDAQ:VCTR)

Number of Hedge Fund Holders: 18  

PE Ratio: 7.67  

Victory Capital Holdings, Inc. (NASDAQ:VCTR) operates as an asset management firm. On March 10, the firm disclosed that assets under management (AUM) were $176 billion in late February, slipping by 0.5% month-on-month. Victory is another undervalued dividend pick. On February 10, the firm declared a quarterly dividend of $0.25 per share, an increase of more than 47% compared to the previous dividend of $0.17. The forward yield was close to 3%. In late December 2021, the firm had announced a $15 million share buyback program. 

On February 15, RBC Capital analyst Kenneth Lee kept an Outperform rating on Victory Capital Holdings, Inc. (NASDAQ:VCTR) stock with a price target of $44, underlining that there were “”myriad growth opportunities” for the firm through scaling up recently acquired franchises as well as through future mergers and acquisitions. 

Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in Victory Capital Holdings, Inc. (NASDAQ:VCTR) with 972,198 shares worth more than $35 million. 

At the end of the fourth quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $129 million in Victory Capital Holdings, Inc. (NASDAQ:VCTR), compared to 15 in the preceding quarter worth $77 million. 

In its Q4 2021 investor letter, Gator Capital Management, an asset management firm, highlighted a few stocks and Victory Capital Holdings, Inc. (NASDAQ:VCTR) was one of them. Here is what the fund said:

“Although higher interest rates will benefit the Fund’s portfolio, we are making sure that the Fund is not simply a bet on higher rates. We have several large holdings with inexpensive valuations and catalysts unrelated to higher interest rates. Victory Capital Holdings, Inc. (NASDAQ:VCTR) is an asset manager making attractive acquisitions of smaller asset managers, trading at 6x earnings, and returning capital to shareholders through increased dividends and share repurchases.”