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Do Hedge Funds Love Versum Materials, Inc. (VSM)?

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Versum Materials, Inc. (NYSE:VSM) shareholders have witnessed an increase in hedge fund sentiment of late. VSM was in 21 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with VSM holdings at the end of the previous quarter. Our calculations also showed that VSM isn’t among the 30 most popular stocks among hedge funds.

If you’d ask most market participants, hedge funds are perceived as worthless, outdated investment vehicles of years past. While there are over 8,000 funds in operation at present, Our researchers choose to focus on the aristocrats of this group, around 700 funds. These money managers direct bulk of the hedge fund industry’s total capital, and by paying attention to their matchless stock picks, Insider Monkey has revealed various investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

D. E. Shaw

We’re going to check out the fresh hedge fund action encompassing Versum Materials, Inc. (NYSE:VSM).

What have hedge funds been doing with Versum Materials, Inc. (NYSE:VSM)?

Heading into the fourth quarter of 2018, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VSM over the last 13 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.


Among these funds, Iridian Asset Management held the most valuable stake in Versum Materials, Inc. (NYSE:VSM), which was worth $223.8 million at the end of the third quarter. On the second spot was Gates Capital Management which amassed $84.4 million worth of shares. Moreover, D E Shaw, Sessa Capital, and AQR Capital Management were also bullish on Versum Materials, Inc. (NYSE:VSM), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, specific money managers have jumped into Versum Materials, Inc. (NYSE:VSM) headfirst. Impax Asset Management, managed by Ian Simm, created the biggest position in Versum Materials, Inc. (NYSE:VSM). Impax Asset Management had $7.1 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $1.1 million position during the quarter. The following funds were also among the new VSM investors: Andre F. Perold’s HighVista Strategies, Mike Vranos’s Ellington, and Steve Cohen’s Point72 Asset Management.

Let’s go over hedge fund activity in other stocks similar to Versum Materials, Inc. (NYSE:VSM). We will take a look at Equity Commonwealth (NYSE:EQC), Mellanox Technologies, Ltd. (NASDAQ:MLNX), Immunomedics, Inc. (NASDAQ:IMMU), and Virtu Financial Inc (NASDAQ:VIRT). This group of stocks’ market caps resemble VSM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EQC 17 297467 -7
MLNX 32 846212 -4
IMMU 30 944645 -3
VIRT 14 72947 -6
Average 23.25 540318 -5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $540 million. That figure was $543 million in VSM’s case. Mellanox Technologies, Ltd. (NASDAQ:MLNX) is the most popular stock in this table. On the other hand Virtu Financial Inc (NASDAQ:VIRT) is the least popular one with only 14 bullish hedge fund positions. Versum Materials, Inc. (NYSE:VSM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MLNX might be a better candidate to consider a long position.

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

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