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Do Hedge Funds Love Victory Capital Holdings, Inc. (VCTR)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Victory Capital Holdings, Inc. (NASDAQ:VCTR).

Victory Capital Holdings, Inc. (NASDAQ:VCTR) was in 8 hedge funds’ portfolios at the end of March. VCTR shareholders have witnessed an increase in enthusiasm from smart money of late. There were 7 hedge funds in our database with VCTR positions at the end of the previous quarter. Our calculations also showed that VCTR 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 58 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.

David Harding

David Harding of Winton Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the recent hedge fund action encompassing Victory Capital Holdings, Inc. (NASDAQ:VCTR).

What does smart money think about Victory Capital Holdings, Inc. (NASDAQ:VCTR)?

At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VCTR over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Is VCTR A Good Stock To Buy?

Among these funds, Steamboat Capital Partners held the most valuable stake in Victory Capital Holdings, Inc. (NASDAQ:VCTR), which was worth $29.2 million at the end of the third quarter. On the second spot was Impax Asset Management which amassed $16.9 million worth of shares. Islet Management, Renaissance Technologies, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Steamboat Capital Partners allocated the biggest weight to Victory Capital Holdings, Inc. (NASDAQ:VCTR), around 5.74% of its 13F portfolio. Islet Management is also relatively very bullish on the stock, setting aside 1.28 percent of its 13F equity portfolio to VCTR.

As industrywide interest jumped, key money managers were breaking ground themselves. Islet Management, managed by Joseph Samuels, initiated the biggest position in Victory Capital Holdings, Inc. (NASDAQ:VCTR). Islet Management had $8.8 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $0.3 million position during the quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Victory Capital Holdings, Inc. (NASDAQ:VCTR) but similarly valued. These stocks are Marten Transport, Ltd (NASDAQ:MRTN), GreenTree Hospitality Group Ltd. (NYSE:GHG), Weis Markets, Inc. (NYSE:WMK), and Retail Properties of America Inc (NYSE:RPAI). This group of stocks’ market caps match VCTR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MRTN 16 46668 -1
GHG 4 25903 -4
WMK 12 30418 0
RPAI 20 74882 -1
Average 13 44468 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $65 million in VCTR’s case. Retail Properties of America Inc (NYSE:RPAI) is the most popular stock in this table. On the other hand GreenTree Hospitality Group Ltd. (NYSE:GHG) is the least popular one with only 4 bullish hedge fund positions. Victory Capital Holdings, Inc. (NASDAQ:VCTR) 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. 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 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately VCTR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); VCTR investors were disappointed as the stock returned 3.1% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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