Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Vericel Corp (NASDAQ:VCEL).
Is Vericel Corp (NASDAQ:VCEL) the right pick for your portfolio? The best stock pickers are becoming less confident. The number of long hedge fund bets were cut by 7 lately. Our calculations also showed that VCEL 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). VCEL was in 18 hedge funds’ portfolios at the end of the first quarter of 2020. There were 25 hedge funds in our database with VCEL holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are perceived as unimportant, old investment vehicles of yesteryear. While there are over 8000 funds in operation today, Our researchers look at the moguls of this club, around 850 funds. These money managers administer the lion’s share of the smart money’s total asset base, and by observing their first-class equity investments, Insider Monkey has revealed various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. Keeping this in mind let’s take a look at the latest hedge fund action surrounding Vericel Corp (NASDAQ:VCEL).
What does smart money think about Vericel Corp (NASDAQ:VCEL)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in VCEL a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Deerfield Management held the most valuable stake in Vericel Corp (NASDAQ:VCEL), which was worth $40.8 million at the end of the third quarter. On the second spot was Archon Capital Management which amassed $7.3 million worth of shares. Marshall Wace LLP, Soleus Capital, and Parkman Healthcare Partners 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 Soleus Capital allocated the biggest weight to Vericel Corp (NASDAQ:VCEL), around 3.76% of its 13F portfolio. Archon Capital Management is also relatively very bullish on the stock, dishing out 2.67 percent of its 13F equity portfolio to VCEL.
Since Vericel Corp (NASDAQ:VCEL) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds who were dropping their full holdings last quarter. It’s worth mentioning that Mitchell Blutt’s Consonance Capital Management cut the biggest stake of the 750 funds monitored by Insider Monkey, comprising an estimated $27.1 million in stock. Kevin Kotler’s fund, Broadfin Capital, also dumped its stock, about $10.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 7 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Vericel Corp (NASDAQ:VCEL) but similarly valued. These stocks are Twin River Worldwide Holdings Inc. (NYSE:TRWH), The First of Long Island Corporation (NASDAQ:FLIC), Anika Therapeutics, Inc. (NASDAQ:ANIK), and GoPro Inc (NASDAQ:GPRO). All of these stocks’ market caps resemble VCEL’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $71 million in VCEL’s case. Anika Therapeutics, Inc. (NASDAQ:ANIK) is the most popular stock in this table. On the other hand GoPro Inc (NASDAQ:GPRO) is the least popular one with only 9 bullish hedge fund positions. Vericel Corp (NASDAQ:VCEL) is not the most popular stock in this group but hedge fund interest is still above 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on VCEL as the stock returned 61.8% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.