Hedge Funds Are Buying Verint Systems Inc. (VRNT)

Is Verint Systems Inc. (NASDAQ:VRNT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Verint Systems Inc. (NASDAQ:VRNT) a healthy stock for your portfolio? Hedge funds were turning bullish. The number of long hedge fund positions rose by 6 in recent months. Verint Systems Inc. (NASDAQ:VRNT) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic is 36. Our calculations also showed that VRNT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 20 hedge funds in our database with VRNT positions at the end of the fourth quarter.

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 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Robert Moses RGM Capital

Robert G. Moses of RGM Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to go over the recent hedge fund action surrounding Verint Systems Inc. (NASDAQ:VRNT).

Do Hedge Funds Think VRNT Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in VRNT a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Seth Klarman’s Baupost Group has the largest position in Verint Systems Inc. (NASDAQ:VRNT), worth close to $138.3 million, accounting for 1.1% of its total 13F portfolio. The second most bullish fund manager is Robert G. Moses of RGM Capital, with a $105.1 million position; the fund has 4.6% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Amy Minella’s Cardinal Capital, Ken Fisher’s Fisher Asset Management and Richard Mashaal’s Rima Senvest Management. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to Verint Systems Inc. (NASDAQ:VRNT), around 4.6% of its 13F portfolio. Ophir Asset Management is also relatively very bullish on the stock, setting aside 3.6 percent of its 13F equity portfolio to VRNT.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Rima Senvest Management, managed by Richard Mashaal, initiated the most outsized position in Verint Systems Inc. (NASDAQ:VRNT). Rima Senvest Management had $33.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $14.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Phil Frohlich’s Prescott Group Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Verint Systems Inc. (NASDAQ:VRNT) but similarly valued. These stocks are AtriCure Inc. (NASDAQ:ATRC), Gibraltar Industries Inc (NASDAQ:ROCK), Liberty Latin America Ltd. (NASDAQ:LILAK), Liberty Latin America Ltd. (NASDAQ:LILA), J&J Snack Foods Corp. (NASDAQ:JJSF), Herc Holdings Inc. (NYSE:HRI), and Alkermes Plc (NASDAQ:ALKS). This group of stocks’ market values match VRNT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATRC 14 196084 -7
ROCK 20 114842 2
LILAK 29 512100 -1
LILA 14 121187 -1
JJSF 15 69398 0
HRI 17 954627 2
ALKS 31 595809 1
Average 20 366292 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $527 million in VRNT’s case. Alkermes Plc (NASDAQ:ALKS) is the most popular stock in this table. On the other hand AtriCure Inc. (NASDAQ:ATRC) is the least popular one with only 14 bullish hedge fund positions. Verint Systems Inc. (NASDAQ:VRNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRNT is 67. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately VRNT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VRNT were disappointed as the stock returned -4.7% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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