The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Vermillion, Inc. (NASDAQ:VRML) based on those filings.
Vermillion, Inc. (NASDAQ:VRML) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of March. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Moneygram International Inc (NASDAQ:MGI), Old Point Financial Corporation (NASDAQ:OPOF), and Ultralife Corp. (NASDAQ:ULBI) to gather more data points. Our calculations also showed that VRML isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Philip Hempleman of Ardsley Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a glance at the new hedge fund action encompassing Vermillion, Inc. (NASDAQ:VRML).
What have hedge funds been doing with Vermillion, Inc. (NASDAQ:VRML)?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 1 hedge funds with a bullish position in VRML a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matthew Strobeck’s Birchview Capital has the most valuable position in Vermillion, Inc. (NASDAQ:VRML), worth close to $2.7 million, comprising 2.4% of its total 13F portfolio. On Birchview Capital’s heels is Ardsley Partners, managed by Philip Hempleman, which holds a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish encompass Adam Usdan’s Trellus Management Company, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Birchview Capital allocated the biggest weight to Vermillion, Inc. (NASDAQ:VRML), around 2.38% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to VRML.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Alyeska Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Trellus Management Company).
Let’s now review hedge fund activity in other stocks similar to Vermillion, Inc. (NASDAQ:VRML). We will take a look at Moneygram International Inc (NASDAQ:MGI), Old Point Financial Corporation (NASDAQ:OPOF), Ultralife Corp. (NASDAQ:ULBI), and Severn Bancorp Inc (NASDAQ:SVBI). This group of stocks’ market caps are similar to VRML’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MGI | 8 | 3009 | -6 |
| OPOF | 3 | 4530 | -1 |
| ULBI | 3 | 1619 | 0 |
| SVBI | 4 | 11769 | 0 |
| Average | 4.5 | 5232 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $3 million in VRML’s case. Moneygram International Inc (NASDAQ:MGI) is the most popular stock in this table. On the other hand Old Point Financial Corporation (NASDAQ:OPOF) is the least popular one with only 3 bullish hedge fund positions. Vermillion, Inc. (NASDAQ:VRML) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on VRML as the stock returned 294% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
