Hedge Funds Are Souring On Visteon Corp (VC)

In this article you are going to find out whether hedge funds think Visteon Corp (NASDAQ:VC) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Visteon Corp (NASDAQ:VC) shareholders have witnessed a decrease in hedge fund sentiment lately. Visteon Corp (NASDAQ:VC) was in 20 hedge funds’ portfolios at the end of March. The all time high for this statistic is 56. Our calculations also showed that VC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To most shareholders, hedge funds are seen as slow, old financial vehicles of yesteryear. While there are greater than 8000 funds in operation at present, Our experts hone in on the aristocrats of this club, approximately 850 funds. Most estimates calculate that this group of people preside over bulk of the smart money’s total capital, and by tailing their inimitable stock picks, Insider Monkey has unearthed a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .


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

Heading into the second quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards VC over the last 23 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 Visteon Corp (NASDAQ:VC), which was worth $69.6 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $67.6 million worth of shares. Private Capital Management, Adage Capital Management, and Driehaus Capital 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 Private Capital Management allocated the biggest weight to Visteon Corp (NASDAQ:VC), around 2.91% of its 13F portfolio. Iridian Asset Management is also relatively very bullish on the stock, designating 1.19 percent of its 13F equity portfolio to VC.

Because Visteon Corp (NASDAQ:VC) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there was a specific group of funds who were dropping their entire stakes last quarter. At the top of the heap, Principal Global Investors’s Columbus Circle Investors dropped the largest position of the 750 funds followed by Insider Monkey, comprising an estimated $52.1 million in stock, and Javier Velazquez’s Albar Capital was right behind this move, as the fund said goodbye to about $12.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Visteon Corp (NASDAQ:VC) but similarly valued. We will take a look at Instil Bio, Inc. (NASDAQ:TIL), BancorpSouth Bank (NYSE:BXS), Utz Brands Inc (NYSE:UTZ), Equity Commonwealth (NYSE:EQC), Cerence Inc. (NASDAQ:CRNC), Cantel Medical Corp. (NYSE:CMD), and Korn Ferry (NYSE:KFY). This group of stocks’ market valuations are similar to VC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TIL 21 778526 21
BXS 12 66932 -3
UTZ 13 110348 -2
EQC 21 183175 3
CRNC 20 213371 6
CMD 30 592747 8
KFY 16 226581 -1
Average 19 310240 4.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $310 million. That figure was $197 million in VC’s case. Cantel Medical Corp. (NYSE:CMD) is the most popular stock in this table. On the other hand BancorpSouth Bank (NYSE:BXS) is the least popular one with only 12 bullish hedge fund positions. Visteon Corp (NASDAQ:VC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VC is 34.9. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately VC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VC were disappointed as the stock returned -13.1% since the end of March (through 7/16) 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.