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Did Hedge Funds Drop The Ball On Visteon Corp (VC)?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. That’s a big deal.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Visteon Corp (NASDAQ:VC) has seen a decrease in activity from the world’s largest hedge funds of late. VC was in 17 hedge funds’ portfolios at the end of the second quarter of 2019. There were 21 hedge funds in our database with VC holdings at the end of the previous quarter. Our calculations also showed that VC isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are several tools shareholders have at their disposal to assess their holdings. A couple of the less known tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the elite money managers can outperform the S&P 500 by a very impressive amount (see the details here).

VC_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the fresh hedge fund action surrounding Visteon Corp (NASDAQ:VC).

What have hedge funds been doing with Visteon Corp (NASDAQ:VC)?

At the end of the second quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in VC over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Harold Levy Iridian Asset Management

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Cohen and Harold Levy’s Iridian Asset Management has the most valuable position in Visteon Corp (NASDAQ:VC), worth close to $108 million, accounting for 1.6% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $44.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise Douglas T. Granat’s Trigran Investments, Israel Englander’s Millennium Management and Gregg J. Powers’s Private Capital Management.

Seeing as Visteon Corp (NASDAQ:VC) has experienced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedgies who sold off their full holdings in the second quarter. At the top of the heap, Matthew Tewksbury’s Stevens Capital Management cut the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $1.5 million in stock. Larry Foley and Paul Farrell’s fund, Bronson Point Partners, also said goodbye to its stock, about $1.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 4 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to Visteon Corp (NASDAQ:VC). These stocks are PriceSmart, Inc. (NASDAQ:PSMT), Instructure, Inc. (NYSE:INST), Scorpio Tankers Inc. (NYSE:STNG), and Range Resources Corp. (NYSE:RRC). This group of stocks’ market values resemble VC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PSMT 15 60518 5
INST 21 491235 -3
STNG 23 163011 5
RRC 31 575476 0
Average 22.5 322560 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $323 million. That figure was $282 million in VC’s case. Range Resources Corp. (NYSE:RRC) is the most popular stock in this table. On the other hand PriceSmart, Inc. (NASDAQ:PSMT) is the least popular one with only 15 bullish hedge fund positions. Visteon Corp (NASDAQ:VC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on VC as the stock returned 40.9% during the same time frame and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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