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Hedge Funds Are Buying Vocera Communications Inc (VCRA)

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 Vocera Communications Inc (NYSE:VCRA).

Is Vocera Communications Inc (NYSE:VCRA) a healthy stock for your portfolio? Investors who are in the know are getting more optimistic. The number of long hedge fund positions moved up by 2 recently. Our calculations also showed that VCRA 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). VCRA was in 15 hedge funds’ portfolios at the end of the first quarter of 2020. There were 13 hedge funds in our database with VCRA holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Joseph Edelman of Perceptive Advisors

Joseph Edelman of Perceptive Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. 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. Now let’s review the key hedge fund action encompassing Vocera Communications Inc (NYSE:VCRA).

What have hedge funds been doing with Vocera Communications Inc (NYSE:VCRA)?

Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the fourth quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in VCRA a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, Lynrock Lake was the largest shareholder of Vocera Communications Inc (NYSE:VCRA), with a stake worth $45 million reported as of the end of September. Trailing Lynrock Lake was No Street Capital, which amassed a stake valued at $11.4 million. Perceptive Advisors, Citadel Investment Group, and Renaissance Technologies 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 Lynrock Lake allocated the biggest weight to Vocera Communications Inc (NYSE:VCRA), around 4.44% of its 13F portfolio. No Street Capital is also relatively very bullish on the stock, setting aside 2.29 percent of its 13F equity portfolio to VCRA.

Now, key money managers were leading the bulls’ herd. No Street Capital, managed by Jeff Osher, established the most valuable position in Vocera Communications Inc (NYSE:VCRA). No Street Capital had $11.4 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also initiated a $3.4 million position during the quarter. The only other fund with a new position in the stock is Greg Eisner’s Engineers Gate Manager.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Vocera Communications Inc (NYSE:VCRA) but similarly valued. These stocks are American Finance Trust, Inc. (NASDAQ:AFIN), First Bancorp (NASDAQ:FBNC), BellRing Brands, Inc. (NYSE:BRBR), and Patrick Industries, Inc. (NASDAQ:PATK). All of these stocks’ market caps match VCRA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AFIN 10 13470 2
FBNC 13 42593 -1
BRBR 15 135847 -1
PATK 13 50010 -5
Average 12.75 60480 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $99 million in VCRA’s case. BellRing Brands, Inc. (NYSE:BRBR) is the most popular stock in this table. On the other hand American Finance Trust, Inc. (NASDAQ:AFIN) is the least popular one with only 10 bullish hedge fund positions. Vocera Communications Inc (NYSE:VCRA) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately VCRA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on VCRA were disappointed as the stock returned -5.8% during the same time period 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 many of these stocks already outperformed the market so far this year.

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