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Hedge Funds Cashing Out Of Verisk Analytics, Inc. (VRSK)

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 Verisk Analytics, Inc. (NASDAQ:VRSK).

Is Verisk Analytics, Inc. (NASDAQ:VRSK) worth your attention right now? Hedge funds are becoming less confident. The number of long hedge fund bets decreased by 2 in recent months. Our calculations also showed that VRSK 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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.

Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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. With all of this in mind let’s take a look at the key hedge fund action encompassing Verisk Analytics, Inc. (NASDAQ:VRSK).

How are hedge funds trading Verisk Analytics, Inc. (NASDAQ:VRSK)?

Heading into the second quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in VRSK a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Charles Akre’s Akre Capital Management has the largest position in Verisk Analytics, Inc. (NASDAQ:VRSK), worth close to $341.3 million, comprising 3.3% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $187.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of Nicolai Tangen’s Ako Capital, James Parsons’s Junto Capital Management and Greg Poole’s Echo Street Capital Management. In terms of the portfolio weights assigned to each position Junto Capital Management allocated the biggest weight to Verisk Analytics, Inc. (NASDAQ:VRSK), around 4.09% of its 13F portfolio. Akre Capital Management is also relatively very bullish on the stock, setting aside 3.32 percent of its 13F equity portfolio to VRSK.

Because Verisk Analytics, Inc. (NASDAQ:VRSK) has experienced falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedgies that slashed their full holdings last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of all the hedgies watched by Insider Monkey, worth close to $74.4 million in stock. Sander Gerber’s fund, Hudson Bay Capital Management, also dropped its stock, about $14.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Verisk Analytics, Inc. (NASDAQ:VRSK). We will take a look at Public Service Enterprise Group Incorporated (NYSE:PEG), Motorola Solutions Inc (NYSE:MSI), Paychex, Inc. (NASDAQ:PAYX), and O’Reilly Automotive Inc (NASDAQ:ORLY). This group of stocks’ market values match VRSK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PEG 34 901655 3
MSI 34 308519 -7
PAYX 41 643102 5
ORLY 60 2486584 -4
Average 42.25 1084965 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.25 hedge funds with bullish positions and the average amount invested in these stocks was $1085 million. That figure was $925 million in VRSK’s case. O’Reilly Automotive Inc (NASDAQ:ORLY) is the most popular stock in this table. On the other hand Public Service Enterprise Group Incorporated (NYSE:PEG) is the least popular one with only 34 bullish hedge fund positions. Compared to these stocks Verisk Analytics, Inc. (NASDAQ:VRSK) is even less popular than PEG. Hedge funds clearly dropped the ball on VRSK as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on VRSK as the stock returned 23.9% so far in the second quarter and outperformed the market by an even larger margin.

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